Should I Purchase in Today’s Market

“Should I purchase in today’s market?” is the #1 questions I am fielding. There has been a rise in interest rates and it has people wondering if it is foolish to purchase in this market. Here are my thoughts on that…

1. Don’t let the rate be the deciding factor. Take a look at the payment. Being comfortable with the payment and the cost for the loan should really be the focus. If the financing is comfortable, then purchasing a home makes really good sense. Keep in mind that 3% interest was never going to be long term. That was just a window in time. Mortgage rates were in the 15-18% range in the 80’s. 7% is actually a reasonable rate.
2. Home ownership is an opportunity for stability and financial gain. The sooner you invest in a home, the sooner you will start building equity. Rent buys you a place to live, but it doesn’t have any further return. Even if a house payment is higher than rent, consider the return on the equity that is being built with the house payment.

What if the payment isn’t comfortable or even possible? Am I ever going to be able to buy a home? Here are a few things you can do to better your position for purchasing a home.

1. Put money into savings to build up down payment funds. By increasing the down payment, you will decrease the loan amount. It could also move you from a mortgage insurance requirement to no mortgage insurance, which would lower the payment.
2. Work on paying off debt. If you eliminate other debt, you may have funds freed up to put into a house payment.
3. Take a look at using 401K or other investment funds as a down payment source. If the current investment has a low to negative return, perhaps you could take it out of the current investment and move it to a real estate investment. Real estate has the opportunity for growth and return just like stocks and money market accounts. The return can go up and down, but historically, real estate is a strong long term investment.
4. Consider purchasing a more modest home or a home that needs a little fixing up. You could live in that home and build equity to later sell and purchase the more ideal home.
5. If you have a job advancement or pay raise on the horizon, maybe you just sit tight until it kicks in.

Some people are not going to be able to purchase in today’s market. But if owning a home is your goal, keep working towards it. Get connected with a trusted real estate agent and loan officer and let them guide you and encourage you until the time is right. Home ownership is worth the effort. It is an opportunity to control your own space, create stability for you and your family, be a part of a community and build financial gain.