Why NOW is the Time to Buy a Home
10.05.08
Uncertain of how to use the internet effectively without completely sacrificing my private life, I’ve elected to refrain from blogging on personal matters until I can settle the internal conflict the internet age presents for me. But while I still sort that out for myself – and for my readers – I recognize it is my responsibility as an author of self-help books, particularly my latest book OWN IT! The Ups & Downs of Home-Owning for Single Women, that I speak to our increasing fears about today’s economic state and our developing a plan of security for ourselves in such a financially volatile climate.
In a financial environment as dire as America’s has become, we are panic-stricken to just hold onto what we have. We watch with fear as banks go bankrupt and the stock-market plummets. We pray we keep our jobs as unemployment rates skyrocket. Uncertain and confused about how to best navigate through these rough financial times without jeopardizing our entire future, we do nothing. But doing nothing may not be the right answer for you.
The news as of late has been so focused on homeowners going under, facing foreclosure, and banks and mortgage lending companies being acquired or possibly bailed out, that home-buying has become underestimated as a potential long-term return-on-your -investment in your future. If you’ve saved enough for a reasonable down payment and still have enough liquid cash left over for a rainy day fund (and you’re pretty certain your job is secure), now, more than ever before in the past decade, is a great time to buy a home!
Case in point, just a month ago, a single, female acquaintance JUMPED on a short sale opportunity in my established Santa Monica neighborhood. And viola, with little trouble or competition, she quickly became a first-ever home owner…paying WELL below market value of similar homes sold less than just a year ago. Now, she has excess money for remodeling and decorating than if she’d bought her home when everybody was clamoring to get into real estate.
So get into the game while you have the chance to get ahead. Consider the 5 points below why:
1.Home prices have decreased substantially. With homeowners in over-their-heads from inflated mortgages during the housing boom and mortgage lending companies’ money spread too thin, home prices are ripe for the buying.
2.Lock-in low interest rates. With stricter lending policies, it is tougher to get a loan, for sure. But if you’ve been saving and have a good down payment and excellent credit, mortgage lending companies are desperate to recoup some of their money.
3.You get more bang for your buck. With homeowners needing out, short sales and homes with more room or “extras” are yours at bargain prices.
4.No to few competitive offers. People are scared of what’s to come. Now’s the time to jump on what could have been theirs, but because you didn’t hesitate, you scored.
5. Everybody always needs a home. Buy inexpensively now. Upgrade down the road when the market prices have soared.
Again, make sure you’ve done your hard-work upfront and have enough money in a down payment to minimize a monthly mortgage bill and property tax. Also, diversify. Make sure you have enough liquid cash available (money-market accounts, government bonds or FIDC-backed institutions are preferred) to cover escrow and your living expenses for at least six months in case of unforeseen expenses. After all, living house-poor is never a good idea. So balance, especially in times like these, is the safest way to keep what you have while taking advantage of opportunities that may have long-term high-reward earnings. And, need I say it, check youreself when spending money on the little incidentals that add-up to more debt! Buy a home instead.
Seize the opportunities the climate is offering; don’t let it seize you.
