Monday, October 17, 2011

MARKET TRENDS: Time to move up?

The market if fraught with scary headlines and ominous news reports. Could the economy slip once more into a recession? Will home prices fall even further? It's enough to make even the bravest buyer a little squeamish.

The truth of the matter is that now is a fantastic time to buy. Interest rates are wonderfully low and affordabilty rates are at record highs. Not only that, but there is an oversupply of homes on the market. Now is a great time to move up if you play host to the right set of circumstances.

In order to evaluate if now is the time for you to buy, consider these five issues.

1. Interest Rates: Low rates translate into smaller monthly payments and less money over the long-term. The Federal Reserve has promised to keep interest rates low for the foreseeable future, but in the next few years we could see rates climb back upward. If you have excellent credit, you'll likely qualify for an exceptional rate. Better yet consider doing an all-cash purchase (like the nearly 30 percent of the market) and avoid interest rates altogether!

2. Why are you buying?: This is an important question to spend some time pondering. Don't move on a whim. What is the real need to move? Many move-ups need more space, want to claim a more prestigious address, or are ready to settle down for good and want to be exactly where they've always dreamed. Perhaps your current home is unable to be remodeled to accommodate your wants and needs. Regardless of the reason, be sure to spend ample time thinking about what move is best for your family.

3. Equity: Home values have fallen across much of the country and this could mean that equity
you had built over the past few years is gone. Talk to a local real estate agent about the current market value of your home before deciding if now is a time to buy. Most sellers aren't willing to take a loss on their home. The good news? If you've owned your home for many years (at least five) then chances are you do indeed still have equity.

4. Financial Stability: There's a 9.0 percent unemployment rate that doesn't appear to be going anywhere fast. Moving up can mean bigger payments or heftier bills (energy costs, property taxes, etc). Are you ready to take on this new responsibility? Be sure that you have steady employment, adequate retirement savings, an 8+ month emergency fund, as well as savings for downpayment and other closing costs.

5. Family Concerns: There are many different stages to life and at each of these stages one must consider how actions will affect family members. A family with young children will need to consider school districts, sports teams, and friends. A couple nearing retirement may want to consider the needs of children or grandchildren that live nearby. Buying a home is about much more than making a sound financial decision, it's about creating the sort of life you desire.

Moving-up can be part of the fulfillment of a life long dream. Many couples simply can't wait for the day they step inside their perfect home. Now is a great time to make those dreams a reality, just be sure to toss in a little sensibility with your dreaming.

Carla Hil Realty Times October 6, 2011

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