Wed September 25, 2013
Buying A Home In Today's Market
It’s the most important investment—and the largest asset—that most people will ever make and own. It’s volatile in price, difficult to manage, and subject to sudden and total loss. For many, it’s also their hope of a secure future.
Interests rates have been rising significantly over the past year making many stop and consider if they can buy a home. Whether buying your first home, downsizing, or upgrading, as these rates continue to steadily rise home buyers feel a bit of urgency to make their decision before rates rise any more. Of course, interest rates can be a big factor. They not only influences if you can afford a home, but how much home you can afford.
We ask our experts: how do you know how big is too big? Our Cash Money Crew says everything depends on how much debt you are coming to the table with. If you don't have debt, that means you can probably afford more house, or make bigger monthly payments on your mortgage. However, if you have car payments or student loans, this could mean you have less money to spend monthly on your home. David Jackson a Certified Financial Planner (CFP) at Waddell & Reed Financial Advisors says, " just because you can take out [a loan] doesn't mean you can afford it." Each home buyer must look at their budget and see how much they can afford to pay per month on their mortgage and figure their options from there.
Are you a first-time home buyer? The Cash Money Crew suggests putting up 20% as a down payment on your first home. However, the average person doesn't have that kind of money and may need to look at inter-family loans or other resources.
Of course, it's not always a good idea to buy a house. While an individual may have the money to pay the monthly mortgage, there are also the surprise maintenance costs that come along with owning a home. That's why for many, renting can be advantageous. Although you do run the risk of your rent going up every year, those surprise maintenance costs cause some individuals to think twice about becoming a home owner.
Any of this seem confusing? The Cash Money Crew has a few suggestions to become educated on the vocabulary and concepts that come with buying your first home, mortgages, and refinancing.
- Contact your local library for beginning finance courses. Or search for local financial seminars where you can attend and ask questions.
- Check out MakingHomeAffordable.gov for online tools and information.
- David Jackson, CFP with Waddell & Reed Financial Advisors
- Lucas Bucl, CFP with KHC Wealth Management Services
- Dan Mathews, CFP with Stepp & Rothwell
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