Is now the best time to buy a home?

[Aug 12, 2010.]

 

Mortgage rates fell again this week, hitting a record low of 4.44 percent for a 30-year fixed-rate home loan. Should you break out the bubbly and get serious about buying a home, or take a more cautious stance and avoid getting caught up in the hype of low mortgage rates? Here are four ways to help you decide whether or not you should buy a house now.

1. Are you financially healthy? Buying a house is a major commitment that extends well beyond closing, so think beyond the down payment. Having too much debt may indicate that you are having trouble handling your finances. Juggling multiple credit card payments, student loans, auto financing, and other obligations is only going to get tougher if you take on a mortgage loan. Don't forget that mortgage lenders include the cost of homeowners insurance and real estate taxes in monthly payments on mortgages.
2. Is your credit good enough to qualify for the best fixed rate mortgage? The lowest mortgage rates ever aren't going to help anyone who has a track record of late bill payments, loan defaults, foreclosures or bankruptcies. If you end up having trouble making the mortgage payments, the potential liens and judgments on the property won't help your credit history.
3. Do you already own a home? Honestly assess your situation to determine whether you really need to move at this time. Do you want to buy a different home because your family has outgrown the current one? Or are you simply looking to upgrade your lifestyle by getting a bigger, more impressive home to keep up with your peers? If you don't need to relocate for a job, and if your current home is adequate for your needs, it may be best to stay where you are. If you have a high interest rate on your current loan, consider mortgage refinancing to lower your monthly payments. Use a mortgage calculator to run the numbers.
4. Are you ready to assume all the responsibilities that go with owning a home? Owning a home requires regular maintenance and repairs. You may be responsible for mowing the lawn, shoveling snow, fixing the roof, and other chores -- unless you can afford to pay someone else to do it.

It's an ideal time to buy a home if you have good credit, a hefty down payment, and stable employment. But if you are worried about your job security and where the economy is heading, purchasing a home at this time could add to your stress.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.