Buying vs. Renting
I'm in the business of selling homes but sometimes I need to advise clients that now might not be the right time for them to buy. Here are some things to consider when considering a home purchase.
Job instability or Relocation
Is there a good chance you will be transfered in the next couple years? Be cautious of buying in a soft market that isn't seeing much appreciation. Real estate is very cyclical and trends tend to shift every 2
4 years. If you are new to the area heed your real estate agents advise as to the what the market is doing. Unless you catch the beginning of an upswing market, and you have a chance of in the following 1-2 years be careful. You will need to see approx 10% appreciation to break even.
Bad Credit/High Debt Ratios
This is pretty self explanatory. The worse your credit score the worse your interest rate. Since the shake up of the sub prime lending market in early 2007 this has become even more relevant. Buyers that could qualify for a loan in 2006 may no longer qualify. Lenders also look at debt ratios, these ratios take into account how much you owe, what your payments will be (PITI) and how much you make. Beware of unscrupulous lenders who are willing to give you a loan so high you may not be able to eat! Sometimes it makes sense to put off buying and clean up your credit and pay off debt.
Market Prices Inflated
I have never heard an economist say over the long haul the value of a home will go down, it's should be the single largest investment you will make. Think about what homes in your neighborhood were selling for even 5 years ago, bet you wish you could have bought them
don't worry we all feel that way! When a market is in a strong sellers market boom it may not be the right time to jump on the wagon. And it's often hard not to get swept into the tide of home buyers and feel like your going to miss the real estate boat. Now is the time to ask the for the advise of your real estate professional. Although we don't have Crystal balls we can pull out, if your agent has the experience of time in both up and down markets she should be able to advise you.
