Buying a home in today's market, part 1
Recently, I had the pleasure of doing an adult ed. home buyers class for the Marietta Community School. I have decided to take some of my outline notes and form the into a blog series for home buyers.
The content is geared a little more toward first time buyers but will still be very relevant for move up buyers as well. Also, this is based on my own knowledge and experience in our local market. All real estate is local, so if you are reading this in another part of the country then some of the ideas may not apply or at least they may apply differently.
- Is it a good time to buy?
- The news, credit crunch, mortgage meltdown or whatever else they are calling it..
The general discussion here is should I buy a home today or wait until the market calms down. In order to answer the question you first need to look at the long term benefits of home ownership.
Here are a few:
1.Fixed payments - no more rent increases
2. tax deductible interest
3. Build equity through long term payments. Your house can be sort of a forced savings account.
4. Build equity through appreciation. For any 10 year period including the years of the great depression real estate has gone up in value. We have seen that homes can go down in value but I also believe that they will go back up.
5. Control a large, valuable asset for the cost of a down payment. $200,000 dollars of stock costs $200,000 to buy. A $200,000 house will have a down payment ranging from a few thousand dollars to maybe $40,000. But you control the entire house and are entitled to 100% of the benefits.
- Establish family and community roots.
- Privacy -Play the stereo without somebody banging on your walls :-)
- Freedom - In my house we have 3 dogs, 1 cat, a lime green painted bedroom, and a bright pink bedroom. It our house we can paint the rooms with whatever we want.
So the long term investment potential is just 1 reason to buy a home.
If you are are financially stable and willing to get in to home ownership for the long haul, then I say don't try to time the market. Real estate is on sale right now. It might go lower or it might not. If you are in it for the long haul it shouldn't matter.
On the other hand, if your job, or even the industry you are in are uncertain then you might want to wait for things to stabilize. Also, if you think there is a likelihood that you will want to sell the house in the short term (5 years or less) then you might want to consider waiting.
I mentioned earlier that it is important to be financially stable. According to financial adviser Dave Ramsey you should have 3-6 months of living expenses set aside in savings and save up enough to pay at least a 10% down payment. You certainly need to have cash reserves and be prepared for any unseen bumps in the road.
A look ahead: I am anticipating there will be about 8-10 parts to this series.
Part 2 will be "Should you buy if you have a home to sell?" and part 3 will be "Getting credit ready".
Read Part 1, Here - Is it a good time to buy and should I buy?
Read Part 2, Here - Should you buy a home if you currently have a home to sell?
Read part 3, Here - Getting Credit Ready/ How much house can I afford?
Read Part 6, Here - Appraisal, Inspection, and Due Diligence
Read Part 7, Here - To the closing and beyond
Bob Southard, e-ProRealtor®, Solid Source Realty, Inc. Buy or sell a home in Powder Springs, Marietta, Kennesaw, Acworth, Dallas, Hiram,and Cobb, Paulding, Douglas, North Fulton, South Cherokee, County, Ga
Visit my website www.AgentBobSells.com
Copyright © 2008 By Bob Southard, All Rights Reserved