Home Buying 101

Should I buy a home in today’s market?

For the average buyer, the state of the real estate market should not really be a major consideration when purchasing a home. If you treat a home like a stock and buy and sell each year, then buying low and selling high is obviously important. Most of us, however, treat a home as a place to live. That means we will, hopefully, live in our home for a while. The longer we live in our home, the less impact the initial purchase price makes on our investment because of appreciation and the pay down of the mortgage.

For many Americans, a home will eventually represent a sizeable portion of our wealth. This wealth, however, is generally built over many years through many up-and-down cycles in the real estate market. The single family home has survived as our biggest investment through many market scares, including most recently the savings and loan fiasco of the 1980s. The reason it survives as a vehicle for wealth is that we all need a place to live and over the long term the single family home has always appreciated in value. This means that even today, there are still buyers! You’re considering buying a home, aren’t you?

Let me answer the question “should I buy a home in today’s market” by finding out if you are ready to buy a home:

• Do you have stable income and is your source on solid ground?
• Is your credit in decent shape? Your credit score should be above 600 with no negative marks in the last 12 months.
• Are you living within your means? In other words, are you putting a little bit into savings each month?
• Do you have 5% of the purchase price saved up? For example, if the purchase price is $100,000, do you have $5,000 in savings? If not, is someone gifting this amount to you?

If you answered no to any of those questions, then you might want to get your financial situation in order before buying a home. Here’s why… Most foreclosures happen simply because the home buyer cannot weather a brief downturn in their financial situation. Moving into a new home is expensive and if you are not prepared for the added expenses, you can easily find yourself in a bad position.

If you answered yes to those questions, then the answer to “Should I buy a home in today’s market?” is a resounding yes! Today is a terrific time to buy a home! Inventory is high, prices are low, and mortgages are available to buyers with decent credit and steady income. What this means to a buyer is there are a lot of homes to consider and there are still mortgage companies with lots of money to lend to qualified buyers!

Also, now is a great time to sell if you are moving up in the market, in other words into a more expensive home. While you will probably sell your current home for less than you could have two years ago, those same forces are at work across the entire market? Because all sellers are taking a hit on the price of their home, you are trading your small hit as a seller for the bigger hit the seller takes when you buy! A savvy real estate agent can help you work this market to your advantage!

So are you ready to take the next step? Let’s discuss how to choose a real estate agent…