It’s true that mortgage rates have been going up. However, interest rates are still quite low, and home prices are quite competitive. And, with the economy showing signs that the pace of recovery might pick up, many are beginning to think that now is the time to buy a home. After all, when will you be able to find such a great deal again? While it is no doubt tempting to rush out and buy a house, it might not be the best time for you to purchase a house just yet. Give these questions some consideration before you decide.
Why Do You Want to Buy a Home?
Before you purchase a home, it is important to explore your motives. Be honest with yourself. Why do you want to buy a home? Are you tired of renting? Do you want a place you can call your own? Do you hope that, by buying now, you will have an appreciable asset you can tap into later if you need to? Do you think you will buy the home as an investment property and rent it out to generate an income stream? Do you want to buy because it seems like the thing to do?
The motivations behind your desire to buy a home should be examined. If you are buying because you think your primary residence counts as an “investment”, it might be time to rethink that position. Consider the costs associated with your home, from the mortgage and the interest (the interest!) to property taxes to maintenance and repairs. Even with tax advantages, you might not be able to make a convincing argument that your home will increase enough in value to constitute an investment.
However, if you are buying because you would like a place you can call your own, providing stability for your kids, and allowing you adequate space to enjoy your life, then it might be worth it to buy a home. It might not be a great financial investment, but the emotional investment might be worth it, as long as you view your home as a large purchase.
No matter your reason for wanting to buy a home now, you should critically examine your motivations, and then come with counter-arguments for buying a home. You should consider that things will not turn out as you would like if you attempt to rent the home out for extra income, or that perhaps buying just to buy might not be the best reason for getting anything — especially something so expensive as a house.
Are You in a Position to Buy?
Another issue to consider is whether or not you are in a position to buy a home. Part of the reason we’re in such a mess right now is that many people got homes — even though they weren’t in a good position to buy. Before you consider the home purchase, your debt should be under control, and you should have some sort of reliable income. Additionally, you should have a down payment saved up, and be prepared to handle the extra expenses and responsibilities that come with home ownership.
Take an honest look at your finances, and determine whether you are really in a position to buy. The best deal in the world can’t compensate for not being financially ready to own a home.
This post was featured in the Best of Credit Cards and Saving Money Carnival.