Admit it, the economy is not getting any better and gas prices will never be $1 a gallon again(good times). However, there are advantages if you consider buying a home. We all know that this is a buyer’s market so you have the upper hand when buying a house with lower prices and in better neighborhoods. Buying is the easy part, you can check out the options with a mortgage interest calculator, but with a trouble economy, you must realize that your financial conditions can change at anytime. Do not buy unless you know for sure that your finances are stable.

One big factor that can change everything is your job, with people are getting laid off everywhere(see BOA)these days. Are you sure you want to buy that $800K dream house of yours? or do you want to play it safe and stay in a $700/month apartment? I don’t know about you but I would definitely choose the latter. You must always keep your debt ratios very low before you can even think about buying a home. If your fund gets short because you’re putting all your focus on paying the mortgage, you run the risk of not being able pay for other loans and obligations, this in turn will result in a poor credit. Be aware that if you really want to buy a house, you will have to buy one that you really love because if you find any imperfections with the house after buying. Well then, you will have a very hard time selling it back. You will need to buy to let mortgage calculator do the work for you.

There are a few positive sides to a down market and that is you get the option to choose as many houses as you want because there is no competition. Remember that this is a buyers market, there will always be more sellers so you don’t have to worry about not being able to find your dream house. Another important point to know is that interest rates will be very low and your monthly payments will be lower meaning you can spend less of your income towards housing expenses. However, don’t mistakenly think that lower monthly payment means you can buy a much more expensive house that you can’t even afford.

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31 Responses to Should you buy a home in this economy?

  1. The combination of lower house prices and historically low interest rates makes this a once in a lifetime opportunity to purchase real estate. Obviously, you need to purchase within your means, but the impact of interest rates is huge.

  2. krantcents says:

    This is a great time to buy, however you still need to make sure you can afford the purchase.

  3. I would buy for all the reasons stated above. I would also consider the investment factor when buying a house. There is a better chance for the housing market to higher if you buy in down market. Of course you would have to think long term. I also see many investors picking up cheap houses these days.

  4. Love the last sentence —”However, don’t mistakenly think that lower monthly payment means you can buy a much more expensive house that you can’t even afford.” You absolutely have to know what you can afford and be willing to pass on a good deal if it doesn’t work with your budget.

  5. This is a great time to buy. The price is lower than they have been in many years and the interest rate is very good. Buy now if you can find the right house and can afford it. :)

  6. Niki says:

    I have to agree with most of the comments, that it is a great time to buy if you can afford it. We bought a few years ago, I wish our circumstance had been different I would have liked to have waited.

  7. In addition to the comments above, there are simple rules in buying a house: 1) The one thing you can’t do to a house is move it so buy in the right location. 2) Don’t buy on a main road – a cul de sac is ideal. 3) Check what the neighbours are like before you commit – the worst thing is to buy your dream house only to find a heavy metal group next door (unless you like it of course).

    Other than that, there are good reasons to rent – in particular you don’t tie up all your capital (if you have any) and you are much more portable if that opportunity comes up.

    ‘Nuff said!

    • Aaron Hung says:

      nicely said, I would love to buy a house with a cul de sac…more parkings for those holiday parties :D I found one a few months ago but couldn’t get an approval so I’m stuck renting and saving up now

  8. YFS says:

    I believe you should only buy a home if you’re financially ready for the house. Meaning, you have retirement in place, 6-12 month emergency fund, a good down payment and your mortgage is less than 25% of your net monthly income.

  9. Marissa says:

    It think it is a fantastic time to buy, but that doesn’t mean that you should. The first priority is making sure you have enough to afford a house.

  10. I agree with everyone else, it is a fantastic time to buy if you are in a position to do so. Factor in rate increases and take a long term view, I don’t think you can go wrong over time.

  11. Little House says:

    I’d have to agree that it’s a great time to buy, but only if the potential buyer is ready (ie. has a down payment and chooses a house they can afford). I’d love to buy within the next two years, I’m just not sure I’m ready – or will ever be living in California. ;)

  12. [...] Aaron Hung asked if you should buy a home in this economy. [...]

  13. Michelle says:

    I agree with the others, this is a great time to buy, if you can afford it. I bought a house at the end of 2009, and it was a great time to buy. Tons of sellers and house, and no one buying, so we got a great deal.

  14. It really is a great time to buy, just not for us. Personally, I would like to have a large chunk of money saved before we ever buy a house. Who wants to buy a house and end up losing it because they weren’t prepared? Not me. :-)

  15. I not buying yet. Holding on to have more down payment accumulated in saving

  16. Buying now is probably an opportunity but only if and when financially ready. Owning a house is a liability to begin with; having 90-95% mortgage is a stone around one’s neck. Also I have been thinking that if one has the cash flow renting may be not such a bad option (contrary to persistent PF mantra). Main thing – keeps one mobile. But then it depends on lifestyle choices, of course.

  17. Randa says:

    I definitely think you need to be ready to buy a house no matter what the economical situation is. I just bought a house that cut my overall monthly bills to less than 66% of what it used to be and I ended up in a better living situation. People tend to get in trouble when they buy houses at the max [or above!] their monthly budget, giving them no wiggle room. We were willing to pay an additional 500 on our rent to rent a house similar house in the same area – instead, we now have an investment that is 700 less than the rent in this market!

    Granted, we also plan on being here for ten more years. :0]

  18. It is a great time to buy, but it has to fit in your budget. Not to mention, what you level of comfort is with regards to taking on a mortgage.

  19. Doctor Stock says:

    I have a friend who has bought several homes (to rent) and has already managed to turn 3 of them into successful rental income properties. It seems like a great plan given the depressed prices and nature of those who cannot get mortgages, yet still want a decent place to live.

  20. Neo says:

    I am on the hunt to buy! Both for my primary residence and for investment properties. I think it is a great time to buy, BUT I am ever mindful that as you stated; my job could be gone tomorrow. This means I will not buy unless I still have at least 6 months in emergency cash ready to go AFTER a down payment and closing/moving costs. Last thing I want to do is move in and have to start selling stocks to live…

  21. I am looking to buy in the next year or two, but will probably be a rental since it is hard to buy in my region of the country (it’s way too expensive).

    • ProfitsOn says:

      Yes.

      Here are some numbers. Of course, past performance is not indicative of future results.

      Since 1969, in the U.S., housing market prices topped roughly every 9 years (1969, 1981, 1990, 1999, and 2007) and bottomed every 10 years (1971, 1982, 1992, and 2002).

      From top to bottom, declines lasted for about 2 years (69/71, 81/83, 90/92, 07/09 (?). New highs were then reached after 3/5 years from the bottom.

      The current decline started in 2007.

  22. Aside from the life style and ownership feeling …

    Buying a home or not can have an impact on your retirement. Most retirement planning assume your housing cost will be nil when you reach retirement as your mortgage should be paid (except for maintenance). If you decide to rent, you need to save MUCH MORE to continuously cover the cost of housing when you reach retirement.

    With respect to this economy, borrowing at low interest rates can save you a bundle and something to consider since investing to grow your nest egg is not that easy either.

    Buy what you can afford :) It’s one of the principle that seem to be forgotten.

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