If you are thinking about purchasing a home right now, you are probably getting a lot of advice, some of which may be not to buy. A key factor to keep in mind is that buying a home is situational. Maybe it is not the best time for some, but it may be the perfect time for you to buy. There are three questions you should ask yourself before purchasing in today’s market.
1. Why should I buy if house prices are still depreciating?
When you are buying, COST should be your primary concern. Your monthly payment (cost) is definitely impacted by the price of the home you purchase. The other major component is the interest rate. Waiting for prices to bottom out while rates are increasing can wind up costing you more over the life of the mortgage. Waiting for prices to bottom out seems to make perfect sense. Yet, at a time when rates are increasing, it might NOT make sense. Make sure you have a mortgage professional to help you with this math before making a decision.
2. When will I begin to see appreciation if I buy now?
This is a great question. Marco Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010. They ask 100+ housing industry experts to project housing prices through 2015. By 2015 they project that prices will rise to reach a cumulative appreciation over 10%.
Purchasing a home today makes great sense from a financial standpoint. You want to buy low and sell high. We may be at the low point regarding the COST of a home, but buying a home should not be purely a financial decision.
3. Why am I interested in buying a home?
This is the most important question of all and is not to be monetarily based. Think about why you began to consider purchasing a home in the first place. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:
- A good place to raise children and for them to get a good education
- A place where you and your family feel safe
- More space for you and your family
- Control of the space
What non-financial benefits will you and your family derive from owning a home? Don’t allow money to get in the way of you making the right decision for you and your family.