To Buy Or Not To Buy?

Now is the time to buy! You read and hear it everywhere. Real estate and financial experts agree that today’s housing market certainly favors the buyer. Low interest rates, larger inventories, and affordable prices make buying now very enticing. The question one should ask first though, is buying right for me?

Below is a list of things to consider in making that decision. Owning a home is a long term financial responsibility and should not be entered into lightly. If you decide to purchase, start off making the first wise decision by using a professional real estate agent. The internet gives buyers unprecedented access to the property listings but you will be much better off to have an agent with your best interest at heart that can advise and assist you through his/her experience and expertise.

Stability – How stable is your job? How committed are you to staying in one place for awhile? If your company is experiencing lay-offs or you are not committed to staying put for a few years, then owning is not your best choice. Real estate transactions are costly; you may end up losing money if you have to sell too soon.

Current Financial Status – There is a rule of thumb that you can buy a home that runs approximately two-and-one-half times your salary. But a decision should not be made by this alone. It is important to also consider debts and expenses. What kind of emergency fund do you have? Illness, injury, or loss of your job could all mean disaster without an emergency fund of at least 8 months to help prop you up. A loss of your home could leave a bad mark on your credit for 7 years. 

A Wealth Builder – Building equity in your real estate purchase will not happen overnight; however, long term it can become one of your largest assets. What if housing prices continue in a downward trend, it could be years to even begin building equity. Sometimes it is 3-5 years just to break even. Be prepared to stay settled for years to achieve this. 

Tax Advantages – Home ownership provides a variety of tax advantages. To date there is favorable treatment of home ownership by the Internal Revenue Service. Your home sweet home can become a shelter from taxes. 

In general, home ownership is a wiser choice when there is stability in your life and purchasing a home is another step of many you have already taken on a decisive life path. Purchasing a home that you can afford and not overextending yourself for reasons of status will allow you to continue to enjoy more of the other things you like to do. An accumulation of savings is necessary to weather any unexpected circumstances and a secure income will allow you to continually meet your monthly obligation. There is nothing like pride of ownership and owning your own home provides a sense of community and stability.