Having sold a home recently, it still amazes me that people are practically stepping on top of each other to buy a home during this pandemic when no agent is allowed to host an open house. Mortgage rates are crazy low right now, but is the monthly payment the only thing you should be considering?
Sure, the economic numbers aren’t as dire as what the experts feared at the onset of the shutdowns, but aren’t there too many people thinking that now is the time to buy a home? Is fear of missing out happening not just in the stock market but the housing market as well? While it is no doubt tempting to rush out and buy a house, whether now is the best time for you to purchase a house isn’t a sure thing. Give these questions some consideration before you decide.
Why Do You Want to Buy a Home?
Before you buy a home, it’s important to explore your motives. Be honest with yourself. Why do you want to buy a place? 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 it because owning the place you live in 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 the monthly expenses.
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. We’d like to think we learned our lesson in the financial crisis, but some lenders are relaxing their requirements on documentation again because they are just swarmed. Before you consider the biggest purchase of your life, your debt should be under control. You should also 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 homeownership.
Take an honest look at your finances, and figure out 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. The last thing you want to happen is to immediately feel stress out once you move in.
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Originally posted at https://moneyning.com/housing/should-you-really-buy-a-home-now/