Q&A: Should I Buy?

Q: I am thinking about buying a home even though the market is really bad in my area right now. It seems I might be able to get a really good deal on a house and I want to stop paying rent and get into home ownership. What are some of the things I need to consider? Or should I just wait altogether?

A: In today’s market you should certainly consider not only whether or not you can afford the home (down payment—20% or so, insurance, maintenance, etc) but it is critical that you are comfortable with the stability of the market in the area where you are considering purchasing. Are property values still sliding, or have they stabilized? Do you plan to live in the home for the next 8-10 years so the market conditions overall have returned to a more normal state? Can you buy the home at an amount which you feel will not have you upside down (owing more than possible re-sale) on day one?

If the home needs repairs do you have the funds readily available to handle them or can you do them yourself? Are you sure you are ready to assume the responsibilities associated with owning, caring for the yard, etc? Only you can answer most of these questions. I would recommend that you take some time and evaluate not only the questions which I already asked but also:

1. Why do you wish to buy? Is it to build equity? Enjoy a certain lifestyle? To feel that you have accomplished a goal you set for yourself? Because you are a certain age and you SHOULD? Is it because you are being told you are foolish if you keep renting? Carefully examine whether or not the reasons for considering the purchase come from within and that buying a house will, in fact, meet your needs.
2. Are you informed enough about all the aspects I have raised questions about to make a good decision?

If you are not, then do the research, seek out the answers, get the details so you make an educated decision. Then go for it.

Lastly, please tell me you are looking for a house for shelter, not a house as an investment. On the surface the question above gives the impression it is from an individual looking for a personal residence. I answered based on that assumption.

If you are very strong financially and want to invest in rental property for the long haul, then go for it—with caution. Keep in mind that everything written above still applies.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)