Sunday, February 10, 2013 - Article by: Steven Ceceri - Creative Financing Options Group -
Why buy a house? It no longer seems to be a good investment. Given the current housing climate, this is essentially what many renters and first-time home buyers may be thinking. They may also be mulling over the following questions: why buy when I can rent for approximately the same amount as owning? Why buy when prices continue to decline? Why buy when I am uneasy about my future?
Yet, if home ownership is such a bad thing then why, according to the 2006-08 American Community Survey (www.factfinder.census.gov), does New Hampshire have a home ownership rate of 73%? Could it be that home ownership is a good investment? The truth is: home ownership does make sense for people who purchase a home for the right reason, which is having a place to call home for many years to come.
To get past the idea that home ownership is a poor investment, home buyers need to look at the most significant purchase they will ever make as not just a house or an asset but as a home. Buying a home, in most cases, is an investment in a better quality of life and a better future - the big payoffs here are not monetary.
If home ownership is viewed by a buyer as purely a financial investment, it is a risky venture like playing the stock market or a high stakes poker game. If a buyer wants to purchase a house just to try and improve their wealth by using its equity or by flipping the house for a profit, then that individual is not taking full advantage of the true value of home ownership. And yes, in the short term, the costs of home ownership are equivalent to and sometimes greater than renting, so it would not make sense to purchase a home if a buyer doesn't plan to stay in a particular place for long.
So, if home ownership still makes sense, when is the right time to buy a house? The answer should be when a buyer is ready to make the financial commitment, plans to stay in a community for a number of years, and has the time, desire and/or resources to maintain a home.
While it's true that home prices have declined and mortgage interest rates are currently at all-time lows, it doesn't make sense for a buyer to purchase a home if they haven't taken the time to determine if they are prepared for the financial commitment or if they fear income loss. According to a recent survey published by the National Association of Realtors, 70% of Americans still view layoffs or unemployment as a serious problem in these challenging economic times. Further, it's not wise for a buyer to purchase a home if they have no time or desire to maintain it.
Conversely, it may not be wise to postpone purchasing a home because prices may continue to decline. In the scheme of things, waiting a month or two may not make a big difference in price, and buying a home should be about finding a house that meets the needs of the buyer and their family, not waiting for a high priced home to hit the market for bargain basement prices.
Ultimately, buying a home is a big decision and it should be carefully considered. Yet, if a buyer decides home ownership is right for them, the decision should not be based on potential financial gains or hype about low home prices and mortgage interest rates. Rather, the decision to purchase a home should be based on what home means to a buyer, being ready to build a life in a given community, and being prepared for the financial costs associated with home ownership.
To assess your individual needs, you should speak to a Trust Mortgage Professional and I would be happy to provide you with a Free, No Obligation Consultation to help you with any questions and concerns you may have with your potential housing situation! I'm here to help, so feel free to send me an email to SCeceri@fnbmtg.com or visit my website for more information at www.123LoanYes.com. Have a great day!
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