Whether you’re considering buying your first home, considering buying again after a short sale, or deciding if you should buy after a relocation to <your city,> the real question every buyer should ask is this one: “Is now the right time for me to buy a home."
So let’s take a look at both sides of the question.
First, the reasons why now is a good time to buy:
Home prices are down. Interest rates are still at historic lows. Right now you can lock in to a 30-year mortgage with low payments that won’t go up as your income rises.
In comparison to home prices and interest rates back in 2006 or 2007, you can now buy considerably “more home” for the same money.
We don’t know how soon home prices will begin to rise, but it’s probably safe to assume that ten years from now they’ll be higher than they are today. Interest rates will probably be higher as well, and just 1% can make a huge difference in a house payment.
Add to that the fact that you have to live somewhere. Unless you’re bunking with family or friends, you’ll either pay a house payment or a rent payment.
And if you’re paying rent, you’re not only buying a home for the landlord, you’re probably supplying that landlord with a bit of cash flow over and above his or her costs. So you’re making the payment; paying for property taxes, insurance, repairs and maintenance; possibly paying a rental management firm; and giving a landlord some profit.
Renting gives you no security and no freedom. Your landlord could decide to sell or could go bankrupt and lose the property. Or, he could just decide he doesn’t like you. Then you’d be forced to move. In addition, he or she could raise the rent at the end of your current lease period.
Meanwhile, you have to live by the landlord’s rules. Your lease could contain any of the following:
- No pets.
- No smoking.
- No parking your boat on the front lawn.
- No hanging pictures on the walls.
- No changing the paint color in the bathroom.
- No hanging a basketball hoop on the garage.
- No… anything else the landlord wants to forbid.
You can’t decorate or change your dwelling in any way… so you have no way to enhance and improve your living conditions beyond just keeping the place clean and tidy.
So why would now not be a good time to buy?
You may want to relocate soon…
Now is absolutely the wrong time to buy if there’s a strong possibility that you won’t want to stay in the community for at least the next 3 or 4 years.
We don’t know if we’re at the bottom of the real estate market here in <your city>– we think so, but none of us owns a crystal ball. That means prices could still take another dip. If you’re settled into a home you love and will still be there when this crisis is over, price fluctuations really don’t matter. But if you want to sell in a year or two, changing market conditions could be bad news.
Even if prices remain stable or rise slightly, you need a few years’ appreciation to offset selling costs. So if you’re thinking of moving soon, don’t buy a home.
Your credit scores are low…
If your credit scores are low you may be able to buy, but you’ll pay considerably higher interest rates. The best plan is to get busy working on those scores, then buy after you’re in a better position to get good interest rates. The first steps to take are:
- Pay down your outstanding debt
- Make every payment on time
- Read financial websites and learn simple ways to raise your scores
- Then get some money saved up for a down payment
You have no money in the bank…
You can probably buy with little or no money, but then what? If the furnace breaks or you want to re-carpet the living room, you’ll have to go in debt. Give yourself a little cushion above what you’ll need for a down payment.
Home ownership should add to your joy in living – not create a black cloud of worry over your head.
Is now the right time for you to become a homeowner?
If so, give me a call at 858-342-929. I’ll be happy to introduce you to lenders who have served my clients well, and to help you find a home that fits both your budget and your lifestyle. If you prefer to communicate by email, write me at firstname.lastname@example.org
P.S. If you’re simply curious and want to see what’s on the market today, come to <enter address of your MLS search box>.