Is Now The Right Time To Buy That New Home?

June 12, 2009 12:42:37 PM PDT
Joan Jensen, President and CEO of the Central Credit Union of Illinois, shares some important information and considerations.Recently, many prospective homebuyers have been sitting on the sidelines waiting for the perfect time to buy a new house. And although no one has the crystal ball proving today is the best time, there are a number of factors that indicate there's no time like the present to get serious about finding and buying that new home.

Some key economic conditions that point to this being an advantageous time to purchase a home include:

  • Falling Home Prices: They may not have hit bottom yet, but they are still the lowest in many years and besides, we'll only know where the bottom is when prices rise.
  • Low Mortgage Rates: If you wait and try to "time" the market, you may miss out on today's low mortgage rates. Higher rates could cost you more in the long run than paying slightly more for the purchase price.
  • "Lots of choice" : It's a buyer's market with many homes from which to choose. Substantial savings can also be found with homes involved in foreclosure proceedings, short sales or bank owned properties.
  • Tax Incentive: First-time homebuyers qualify for a one-time only $8,000 tax credit.

But, before committing to any purchase, ascertain if you are properly positioned to assume the financial obligation by answering these simple but important questions:

  • Do you have a stable job?
  • Do you have excellent credit with a FICO score greater than 700?
  • Have you saved (not borrowed) enough money for a 20 percent down payment?
  • Can you afford ALL the home ownership costs including insurances, taxes, and maintenance?
  • Have you put aside some money in an emergency fund for unexpected expenses?
  • Do you plan to stay in the home for five or more years?

If you have answered, "yes" to these questions, then it's time to get started. However, before beginning the search:

  • Get Pre-approved for a Mortgage. Consider buying less home than the maximum purchase price you are qualified to buy could help reduce the potential for financial stress.
  • Sell Before Buying. If you currently own a home that you will need to sell, consider selling your home before you finalize the purchase of a new home or at the very least allow for plenty of selling time.

Low home prices and mortgage rates aren't the only considerations when determining if now is the right time for YOU to make a purchase. Warning signs indicating it might be wise to delay buying include:

  • Apprehension over loosing your job or your company's long-term viability.
  • Inadequate finances for a down payment or emergency fund.
  • Blemished credit.
  • Present financial difficulties or certainty that new home ownership costs will strain the budget.
  • You do not plan to remain in your home five years.

Keeping in mind that there's not one "cover-all" answer to whether or not now is the best to buy a home, the combination of great rates and considerable choices provide a real opportunity for those suitably positioned to take advantage of what many experts portray as an exceptional buyer's market.


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