I'm a financial planner with 5 tips for anyone buying a home this year

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• Don't focus on trying to time the market. Buy a home when it makes sense right now.
• Don't focus too much on the entire US market — your neighborhood is what matters.
• Remember that homeownership isn't the only way to invest in the future.

Several weeks ago, a client asked me, "Given the Fed's plan to cut rates three times in 2024, is this the worst time to buy a house?"

I told my client, "As with anything else, we don't advise timing the market."

If you're also considering whether you should get a mortgage this spring (or not), here's what to think through as you go house hunting.

1. Your personal financial situation matters more than the market

If you need to buy a new home, you want to buy a new home, and your financial situation supports buying a new home …

You should probably buy a new home.

We can't time the market. We can't control macroeconomic conditions. We can't predict what the Fed will do or how that will impact mortgage rates.

We will only ever have 100% certainty on what the "best" timing is for buying or selling in any market with hindsight. So to make decisions in the present, we must focus on what we can know and control.

That means assessing how much your income and assets can support when getting a mortgage.

2. Know what you can afford

When determining affordability for clients, my financial planning firm looks at the total annual costs of homeownership. That includes the obvious: mortgage principal and interest payments, property taxes, and homeowners insurance.

Then we factor in any HOA or condo fees. Most crucially, we include an estimate for home maintenance and upkeep.

You have to include the general cost of homeownership in your housing budget. Yes, even as high interest rates make buying a home with a mortgage more expensive!

There will always be some form of repair improvement that you need to make to a property you own.

We suggest using 2% of a home's value as your estimated annual run rate for maintenance or repairs. If a home's value is $750,000, for example, it's reasonable to assume, on average, you'll spend $15,000 a year taking care of it.

For us to call a home "affordable," its total annual cost should not exceed 20% to 25% of your gross annual income.

3. Consider your specific location

National news headlines about US aggregates and averages aren't so helpful for local buyers. Where we are in Boston, one could make sound arguments both for buying ASAP and waiting it out.

On one hand, interest rates may drop so buying a home with a mortgage is more affordable. Or we could say there's still massive demand in the Boston market despite the jump in interest rates. If mortgage rates do drop, it may only be harder — and more expensive — to buy due to even more intense competition for limited inventory.

Real estate is hyperlocal. Considering your specific community may help you determine if you feel comfortable getting a mortgage now or waiting.

4. Get the lowest mortgage rate you can

Pretty obvious advice if you want to get a mortgage now, right? Here's how to actually do that:

Consider an ARM: Adjustable-rate loans usually have lower rates than conventional fixed-rate mortgages. You'd likely get an ARM assuming you could refinance to a lower rate within five years. The risk is that:

• for whatever reason you can't refinance when you need to, or
• when it's time to refinance, rates are even higher than they are today.

Shop lenders: Get rate quotes from at least three different lenders. When rates are higher, you'll see more variability across institutions. It's worth talking with multiple banks or mortgage brokers.

Negotiate for seller credits: Talk to your real-estate agent about asking sellers for credit you can use to buy down points on a loan. Whether this is a good strategy often depends on the seller's motivations. If you're buying new construction from a developer, they might be happy to do this if you accept their list price. An individual family might not feel the same, because they're more likely to care about the net proceeds in their pocket, which a credit lowers.

5. Or … don't get a mortgage at all!

Owning a home is not the end-all, be-all, especially when the market is so unfriendly to buyers. Renting can be a great choice and even the financially optimal way to go.

If you can:

1. secure a rental you love for the same price as a monthly mortgage payment or less, AND
2. take the money you save with lower rent and/or avoiding additional costs of homeownership and invest it in a globally diversified portfolio

...you could net out ahead of homeowners who save and invest less.

Whatever you decide about getting a mortgage in the near future, don't make your choice by trying to time the market or guess at what the Fed will do next; hindsight makes it seem like whatever happened was obviously the only thing that could have happened.