Before you buy a home you should make a list of important attributes that ensure you get the most for your money. This is more than just aesthetics and comfort, though; you have to consider at least these four things.
Coming out of this slow economy, the housing market looks quite promising but it is definitely slow going. Specifically, according to MKM Partners, new home starts posted a 15% increase since last year with new home sales also up 20%. Thus, many people could be looking at buying a new home in the very near future. If you are one of those people you should definitely take a look at these very important questions before you sign any paperwork.
First of all, you need to ask yourself where you plan to buy. Obviously home pricing is still pretty good compared to the last boom, which was about seven years ago. Fortunately, first-time home buyer affordability is up more than 80 percent across the United States, according to the California Association of Realtors. That, of course, is an average, as some areas of California show first-time affordability as low as 58 percent (in San Francisco). Knowing what the market is like in different regions where you plan to buy could, then, save you a lot of money or simply make it easier to find the kind of home you want in your price range.
Secondly, and speaking of price range, you need to ask yourself if you can truly afford it. This is a fact that will be personally relevant regardless of the state of the market. You also need to remember that the cost of home ownership is more than simply shelling out for a home loan and making your monthly payments (taking into account taxes and insurance, of course). This is just the beginning, though, as you also need to keep in mind that maintenance and repair are now two very expensive things that are your responsibility.
Maintenance includes things like basic quick fixes, mowing the lawn, cleaning, etc. Repair, though, could include everything from fixing a leaky pipe, replacing an entire sink, refinishing and repainting the kitchen, etc. If you anticipate the inability to handle these-and many more-unexpected challenges, it simply might not be the right time for you to buy.
Third, you must always consider if renting is the best option for you. For all the reasons mentioned above, renting is always something you should keep as an option. This has as much to do with the cost of ownership as has to do with the cost of living. The Department of Numbers, for example, shows that the cost of renting in Atlanta, GA is 163 percent higher than that of owning but renting a home in Honolulu could cost as little as 50 percent of the overall purchase cost of a new home. Of course, it is also important to remember that home ownership has tax advantages and equity so you will have to weigh all of this to determine the true value.
Finally you should consider the reality of appreciation, of equity. During an economic time such as this it would be very easy to dismiss the rise in home prices but eventually the booming housing market will return. When it does, the home you buy today could quickly escalate in value, but you will have to determine if you can wait that long before you sell. Presently, the statistics show you should probably live in the house you own for 10 years before you try to rent it out or look to sell. Consider the cost of upkeep, the mortgage, the insurance, and emergency funds in order to determine if it is wise for you to buy right now or if you should wait until your personal situation has improved.