Buying a home is the latest trend in the market. One could hear everyone nagging about a new house. Why is it so attractive to buy a new home even after the historic downfall in market prices during the economic slowdown? According to the statistics, home prices dropped by a huge margin of 33 percent during the economic slowdown (from second quarter of 2006 up to April 2009). Most of the potential homeowners started questioning the benefits of homeownership. However, the truth is somewhat different. The long-term benefits of homeownership outnumber any drop in prices or economic suppression.
Home is one of the most fruitful investments for your family in a longer run. Homeowners could generate enough equity to get a loan against the home for the college education of their children. One should consider it as a long-term savings plan, which can strengthen their financial status over a period.
Important factors every homeowner should consider
- Right time to buy home: With the mortgage rates staying at a substantially low level, this is the best time to purchase a house. In addition to the low mortgage rate, the additional federal tax credit for first-time homebuyers is another important benefit for homebuyers. Most of the experts agree to the fact that this is the most favorable housing condition for homebuyers.
- Find a steady stream of income: According to the records, most of the sales incurred in recent months included first-time homeowners. If you are a first-time homebuyer, it is important to evaluate your employment situation before making any decision. With the unemployment rate at 10%, it has been difficult for most of the American families to maintain a regular income stream. You should consider job security before purchasing a new home.
- Find out the pricing trend in your area: There is a significant difference between the national pricing trend and house prices in your neighborhood. The development in high-tech industries and high-end jobs has made some counties extremely lucrative over a long period. You should consider the local rental stock and compare the amount that you would pay for purchasing the house instead of renting. This comparison will help you find out the right time to purchase a new house in your neighborhood.
- Manage your finances: A common problem among first-time homebuyers is the fact that they purchase homes that they cannot afford. If you are planning to purchase a new home, it is best to keep your monthly mortgage payment to 30 percent of your household income. You need to maintain an emergency fund for an accident toilet breakdown or roof leakage. If you are looking at your finance options, it is important to maintain a high credit score (720 or above) to get low rates. Potential buyers with lower credit score can also get approval, but at a higher interest rate.
- Choose passive approach: A new home is the biggest investment that most of the people would ever make in their house. You should not rely on the advice of your realtor and make sure to analyze potential risks in homeownership. Have a look at all the available options including short sales and foreclosures. These REO (Real estate owned) properties are available at an affordable range and allow you to keep the expenses marginally low. Pay proper attention towards your estate laws and all the charges you would be liable to after becoming a homeowner.