Money Rule #7 Buy A Home When You Are Financially Ready
“Interest Rates Are Still At Historic Lows (or, On Their Way Up)”, “No (Low) Money Down”
Phrases like those are used to entice potential homeowners to enter the market NOW. But the best time to buy a home is when YOU are financially secure enough to purchase what is possibly your most expensive and important asset.
Waiting until a "hot market" cools down a bit and home prices return to more reasonable levels can be frustrating when you thought your time had FINALLY come to take that next step in your life journey. Keeping your monthly costs at a level that is comfortable enough that a broken septic pipe or a leaky washer won't stress your household budget or put you deeper in debt keeps you and your family less anxious when these things happen. In addition to down money and other expenses due at closing, you need to make sure you will have the funds necessary to pay that emergency repair bill without relying on credit.
It’s important to think of a home purchase as building a lifestyle, as opposed to acquiring an asset to be sold (or re-financed) for gain later on. If you are not planning to stay in a particular location for five years or longer, it may not make sense to make a home purchase. You may not be able to recover the fees, interest, and other costs incurred within a limited time frame.
And If you are purchasing a home with someone to whom you are not legally married, proceed with caution. Seek legal and tax advice from trusted professionals before you buy.
Lastly, be as sure as you can that your income will be stable for the long run. Even if it means you need to wait a year or two as interest rates creep higher. Knowing that you are financially secure enough to weather potential emergencies will more than compensate for the few extra dollars of monthly mortgage payment. And by putting yourself in a secure financial position, you’ll be better able to refinance later and save on future payments. Remember, “Good things come to those who wait”.
(Inspired by: “The Index Card: Why Personal Finance Doesn’t Have To Be Complicated” by Helaine Olen and Harold Pollack; Random House, 2016)