Buy now, or wait? That’s the question prospective homeowners are struggling to answer in today’s housing market, where home prices have skyrocketed and mortgage rates have surged to a 14-year high. Many would-be buyers are leaning toward the “wait” side of that equation. In fact, 73 percent of consumers believe it is a bad time to buy a home, according to September’s Fannie Mae Home Purchase Sentiment Index, a monthly survey gauging consumer thoughts on the real estate market.

However, there are signals that the seller’s market is beginning to tilt in the opposite direction. A recent report from Redfin shows that the available housing inventory in the U.S. increased to 2.9 months of supply in mid-September — a one-month gain versus a year prior and a signal that homebuyers will have more options to consider if they’re willing to lock in a higher mortgage rate. Plus, more sellers have been lowering their asking prices as they work to attract nervous buyers.

So, is it time to enter the market to buy a home? Or is it better to wait on the sidelines in the hopes that prices or rates drop over the next year? The decision comes down to your finances. Here are some key considerations to help determine the way forward.

Should I buy a house now?

If you buy now, you can start building equity immediately. That’s true no matter which way the real estate market is leaning at the time. A key point for today’s market, though, is that buying now means avoiding additional mortgage-rate increases later. They’re likely on the way, too, as the Federal Reserve continues to hike rates to fight inflation.

“If a buyer finds a property they would like to call home, they should not delay,” says Stacey Froelich, a broker with Compass in New York City. “You cannot time the market, and a home should be a long-term investment. A year from now, even if prices come down slightly, mortgage rates will most likely be higher. In the end, that will cost a buyer more monthly if they are financing.”

Rising rates can spell serious trouble for your monthly budget. Bankrate’s loan calculator can help give you a sense of what a higher rate will mean for your payments. On a $450,000 30-year loan with a 5.5 percent interest rate, the monthly payment is just over $2,555. If that rate jumps to 6.5 percent, the payment leaps to more than $2,844. Plus, you’ll wind up paying a lot more in interest over the life of the loan.

In general, if you can answer yes to these three questions, now is the time to buy.

1. Do you have excellent credit?

Anytime you’re borrowing money, start by reviewing your credit report and your credit score. The best deals on mortgages will be available to those with credit scores of 740 and above. If you have demonstrated that you are a low-risk borrower with a history of on-time payments, you’ll be in line for the lowest mortgage rates that a lender offers.

2. Have you saved enough for a down payment?

In addition to paying your bills on time, have you managed to save a fair amount of money, too? If you are sitting on a sizable portion of cash that can make a big dent in your down payment, now is a good time to buy. Make sure that you’ll have plenty left over, though. Lenders feel more comfortable loaning you money if you have additional cash reserves that can provide a cushion if something unexpected happens.

3. Are you planning to stay in the home for a while?

In addition to the purchase price, buying a home comes with closing costs that can run between 2 and 6 percent of the property’s price. So, to justify those one-time transaction costs, it’s wise to be reasonably certain that you won’t move again anytime soon — or that you’ll be financially stable enough to hold on to the property and rent it out.

Should I wait for prices to come down to buy a home?

If you want to become a homeowner but are waiting for prices to cool off, here’s the challenge: Housing prices don’t tend to decrease by a sizable amount (with the notable exception of the housing bubble of 2008). However, the good news is that housing prices also cannot skyrocket forever. Here are two instances in which it might make more sense to wait out the market:

1. If inventory in your area is on the rise

If there is no shortage of homes for sale in the market where you’re looking, waiting may save you some money. “It is likely that prices will level off or slightly decrease now that interest rates are rising,” Froelich says.

But waiting can be a losing game in places where housing is severely limited. “However, that’s only if inventory increases,” Froelich continues. “Inventory is [still very] low, and without an increase in supply, it is hard to see how prices will decrease.”

Heather Brown, an agent with RE/MAX Austin Skyline in Texas agrees: “We just don’t have enough houses. Buyers on tight budgets who wait will eventually be priced out of the Austin market.”

2. If your personal finances are less than stellar

The biggest reason to wait is if your current financial situation is not ideal. For example, if you are expecting a sizable commission check, an inheritance or some other windfall that would make a big difference in your down payment, waiting until it arrives makes sense. And if your credit score needs some love, waiting is also smart. Take some time to pay off your credit cards and improve your credit so you qualify for better loan terms.

Examine your local market carefully

Deciding whether you should buy a house now or wait ultimately comes down to where you want to call home. Regardless of national headlines, real estate is hyper-localized and can vary greatly from one market to another.

Consider this data from Redfin: In Naperville, Illinois, a suburb of Chicago, the median sale price of a home has increased by just 2 percent in the past year, and the typical home sits on the market for 48 days. But in Tampa, Florida, home prices have increased by more than 8 percent in the past year, and the typical home sits on the market for just 16 days.

Work with an expert agent

In today’s market, it’s more important than ever to find a real estate agent who can help you successfully navigate the process. “The right broker will be privy to what inventory might be coming to market or a particular situation with a seller or building,” says Rachel Glazer, a broker with Compass in New York City, says.

Bottom line

Trying to buy a house right now can feel overwhelming, but waiting too long can present challenges as well. Review your finances in detail, and take the pulse of the town in which you’re hoping to live. Then, talk with an experienced local real estate agent to figure out if you should buy now or hang tight until the market is a bit more friendly to your bank account.