Should You Buy Your Home?

Everybody knows that the housing market is in terrible shape these days. Depending on who you listen to, there are plenty of people to blame. The bottom line is that after several years of increasing prices, houses have dropped in value, and nobody seems to know where the bottom will be.

Just a few years ago, it wasn’t uncommon to be able to buy a decent house, maybe do a little bit of work on it, and then watch it double or triple in value in ten years or so. If you lived in it, you may have been tempted to take out a second mortgage. But then everything suddenly collapsed. People are still reeling from the destruction.

There are quite a few people today who are sitting on negative equity. This means that they owe more on their house than it’s worth. Which means that they can’t sell it. There are a couple of things they can do in this situation. One is to keep paying the mortgage, until the principle drops below the home’s value. The other is to cross your fingers and hope the housing market recovers. Naturally, if you are looking to buy a house, this also presents a problem.

A few years ago, buying a house was an easy decision. You were almost guaranteed that your home would increase in value. But now, nobody can be sure. Nobody wants to sign a thirty year loan for something that may depreciate in value. So if you are considering buying a house, what should you do?

One thing to do is decide how long you think you’ll be in the area. If you plan on moving to a different city, or if you think you may need a bigger house later on, then maybe you should wait. But if you think you’ll be living there for a while, you may have nothing to worry about.

So if you don’t want to buy a house now, what should you do? Renting is not so bad. Some people believe it’s like throwing money down the toilet, but when you realize that the first five years of a mortgage are purely interest payments, then it’s not so bad.

Buying a house is probably a good idea if you think you’ll be staying there for a while. But if you aren’t sure, then maybe renting is the better option.

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