Buying a Home
How About Now? Is Tt Time to Buy a House?
With mortgage rates at their absolute historic lows, housing prices at 2003 levels, and sellers desperately trying to get out would you really have to ask if it’s time to buy a house? Actually, the answer is not all that simple, and there are a few other considerations that may be important. More important than bottoming housing prices and interest rates are the issues surrounding your own financial situation, such as your income stability, your budget, and whether you have found the home you expect to live in for a long while. Homeownership is still a financially sound idea, but you should crunch some more numbers before jumping in.
Are you better off renting? Unless you plan on being in your home for at least 10 years, you it may make sense to continue renting. That’s about how long it takes to recapture the cost of ownership including fees, sales commissions, and other initial purchase costs.
Are you better off with a shorter mortgage? You can’t get much cheaper debt than a 30 year mortgage. As long as mortgage interest continues to be tax deductible, and you stay in your home for ten years or more, you’ll build equity faster in a longer mortgage. You might as well apply the extra cash to savings or paying down other debt.
Are you better off waiting? If you are holding off with the expectation that housing prices will continue to decline it may end up costing you more if interest rates suddenly rebound, and that could cost you greatly over the long run.