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Personal Finances Weigh More Than Market Fluctuations
Low financing rates have wooed many potential home owners into making the plunge and while that may indeed be a great incentive for those with the finances in good enough shape to do so, letting market fluctuations in either direction, positive or negative, be the deciding factor in your decision to buy a first home is doing yourself a disservice. While market fluctuations are of course important as you go through the decision making process, they pale in comparison to the weight you should put on your own financial readiness.
While it can be an exciting prospect to begin exploring the possibility of owning a first home, doing so entails great amounts of homework on your own financial ability to sustain a long term obligation like a mortgage as well as the more personal questions such as whether or not you are ready to commit to a particular location for an extended period of time. These two types of obligations form different but equally important aspects of what will become your decision to buy or not.
Examine Your Financial Foundation
Your financial situation will tell you more about your ability to buy a home than anything else. More so than a slow down in the market and more so than trends in financing, your own ability to earmark a large sum of money each month to a mortgage payment will largely dictate whether you buy and if you are ready, what you buy. While market fluctuations can change your monthly payment, unless you are on the very edge of being able to afford a property, those fluctuations will likely not make or break your ability to buy.
Principles like building equity and market appreciation in the property should matter more to you than the exact financing rate you can get. Your potential for advancement at your job and the likelihood of getting fired should definitely weigh more heavily in whether you buy than market fluctuations. The message here is simple; evaluate your own ability to pay a mortgage payment each month well before considering what your local market situation might be.
Examine Your Personality Profile
For some people with the ability to pay a mortgage payment each month, that fact does not require an immediate investment in a property. Other personal reasons can color the situation and these again matter more than what your market might be luring you to do. Are you ready to commit to at least five or 10 years in a particular property? If so, buying can be a good option for you but if not, the equity built up in a time shorter than that is often not worth the elevated payments a mortgage entails.
Are there job prospects for you outside of your current company? Will you be giving up a freedom to pursue other, better opportunities if you purchase a home and commit to stay? These are questions you need to ask yourself when thinking about purchasing a property well before examining what your financial market might tell you is a good time to buy or not. This is an important decision and one that has to be looked at from all angles before being completed.
The dream to own a home is ingrained in many of us and when we hear things on the news like favorable financing offers or home building deals, sometimes that ingrained desire overrides other more important factors. Don’t let that happen to you. Evaluate your personal finances and desire to commit to a particular city or area before ever examining the market and its fluctuations. You simply matter more to the process than an interest rate could ever.
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We respond right away! -Colleen Lane, Realtor®
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