Today’s headlines can be confusing: Home prices are down, but may fall further; Interest rates are low, but lending standards have become more stringent. What does it all mean? Is now a good time to buy a home?
There’s no question that the current housing market is very different from the one we’ve experienced in recent years. In many parts of the country, there are a lot of homes for sale and interest rates are still near historic lows. These factors combine to create what can be considered a good buyer’s market -- at least for some.
If you’ve saved enough for a down payment, have good credit and don’t plan to move in the next five years or so, buying today could be a smart move. Waiting until you believe prices have hit rock bottom may not put you any further ahead if you end up missing out on today’s low financing costs.
If you are shopping for a home today, be sure to:
Pre-qualify for a mortgage
Today’s lending standards are more stringent than they were a year ago. Buyers are generally required to have larger down payments and higher credit scores in order to qualify for the most preferential interest rates. It’s therefore more important than ever to shop around and compare loan options from several different lenders and to arrange financing before you put in an offer on a home.
Beware of deals that sound too good to be true
One of the fallouts from today’s housing market has been a dramatic increase in foreclosure rates. Properties in foreclosure may sell at less-than-market price by lenders attempting to recover money they’re owed. But it’s important to consider the potential hidden costs. Buying a vacant home for a steal may not save you money in the end if you have to pay for a costly renovation to make the place livable. Be sure to arrange a home inspection and to factor in the cost of any necessary repairs if you’re considering buying a home in foreclosure.
Compare apples to apples
Despite all the doom and gloom about today’s housing market, home prices are not down everywhere. While prices in certain regions of the country have fallen dramatically, prices in others have held steady or continued to rise. To get a good sense of a home’s true value, go online to compare the price of similar homes in the same neighborhood or have a local REALTOR® prepare a professional competitive market analysis.
And remember, at the end of the day, the decision to buy a home is a personal one that needs to factor in your own financial situation and lifestyle preference. While historically, real estate has usually appreciated in value over the long term, no one can predict the perfect time to buy.
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