So, when should I buy a house?
21 June 2005
By Bill Fooks
If you pick up the latest edition of Time Magazine, the one named Home $weet Home, you will get a good national picture of the Real Estate market. In the article, the numbers for Rhode Island homeowners could not have been better. It states that Rhode Island has had the 3rd highest rate of appreciation when comparing all 50 States, 97.6% appreciation over the last 5 years (only Washington DC at 108.1% and California at 103.0% have fared better). So what does this mean for the typical home BUYER in Rhode Island? Does this mean that now is the worst time to buy, because house prices are so far inflated? Does this mean that if you buy now, that you will automatically lose money when you go to sell?
In buying a home, there are many things to consider, however the overwhelming thing that you must decide on before you buy the home is Comfortable Monthly Payment. This is priority one, and it is also the thing that gets most homebuyer’s into trouble. You must decide within a $100 per month window, exactly what you are comfortable paying per month for your total house payment (principle, interest, taxes, and insurance). Once you have determined this, then prioritize what amentities are important to you in the home. By keeping this simple principle, you will never overpay, because you are comfortable with the monthly payment, and because you are comfortable, you can continue to pay it even if the market declines.
Purchasing a home this way gives you options! You will always pay something to live somewhere, rent or mortgage, you still have to pay. As with any investment, there are risks, however if viewed long term, the gains greatly outweigh the risks. Since you are already paying a mortgage (assuming you rent now), why not pay toward your own? Worst case scenario, if the property goes down in value, and you must move, you can rent the home, and someone else can pay your mortgage, just as you are doing for your landlord now!
So, as you can see, now is the best time to buy, as long as you make an informed decision, and stick to your Comfortable Monthly Payment!
*origionally published on the Fooks Team Journal on June 14, 2005