Single and Buying a House

Buying a house is a huge step in your life. It is a big commitment and probably one of the most, if not the most, expensive object you will ever buy in your life. It is also a very exciting feat for those who buy a house. It shows that they have been able to save up and now they have reached home-owner status. When you own your own home, you don’t have to worry about landlords and you don’t have to feel like you are throwing your money away because now a lot of your mortgage will be going to home equity.

Buying a house also comes with a lot of responsibility. With an apartment, if there are any problems, you call your landlord and they have it fixed at no extra cost to you. When you own your house, you have to pay to get it fixed and go through all the trouble. You also have to make mortgage payments and deal with lenders. Honestly, these and any other problems with owning a house are not a big deal and should in now away cause you not to buy a house.

When it comes to buying a house, most people probably think of a young couple buying their first house. Many young couples do buy houses, but there are many other people that do as well, including single people. Buying a house is a big deal whether you are married or single.

When you are buying a house and you are buying it alone, think about how much space you need and how much space you will need in the future. If you plan on living alone for a while, do you really need a 4 bedroom home? If you plan on getting married in the future, it’s hard to assume you’ll still live in your own house, but consider if you did how much space you may need to start a family. Remember, just because you are buying a house doesn’t mean you need to live there forever.

Also keep in mind the mortgage payments. What amount can you afford? Don’t buy a house you can’t afford. It’s a very simple rule that will do you a world of good to live by. If you are living alone, you can probably buy even smaller and save more money. Think about where you want to live. Do you want your own house that you will keep up or do you want a condominium so that you don’t have to do yard work? Do you want to live near a lot of families with kids or would you rather live where singles live or far from any neighbors?

All of these things should be taken into account when buying a house whether you’re single or not. The most important thing is that you buy a house you love and can afford. Enjoy your new living arrangements!

Why Buy A House In 2011?

Why in today’s economy is it the perfect time to buy a house? Shouldn’t I wait till the economy picks up to start looking for a house?

The truth is, in your lifetime, there will never be a better time to buy a house. Here are the top reasons why now is the time to buy a house more than ever.

Houses are Below Market Prices

There is a major cause and effect that created the kind of market we have today where buyers are able to buy houses at below market prices. One main cause has to do with the strict lending guidelines that have been put into place for the last few years which has decreased the number of qualified buyers. According to the Federal Reserves – Senior Loan Officer Opinion Survey on Bank Lending Practices, the banks have been tightening their credit standards since early 2008.

With a lack of qualified buyers, the amount of unsellable houses for sale greatly increases, creating a surplus of homes. Sellers are forced to start reducing their home prices to become more attractive to home buyers. The surplus of houses creates what economists claim is a buyer’s market. A buyer’s market is when there are more houses on the market than there are qualified buyers to buy them.

Buying a home at below market prices is not only the benefit of buying a home in 2011, it is the norm. The national median average sale price of existing homes, according to the National Association of REALTORS, has dropped close to 14% from 2008 to 2010. Stats also show there are signs of stabilization though, which may mean the market will only get stronger in the next few years. Buying a house in 2011 may be one of the last few chances of buying at below market prices.

Interest Rates are at a Historic Low

If you look back in history you may be able to understand why taking advantage of the interest rates today is so important. According to Wikipedia’s Federal Funds Rate 1954 through 2009, starting in the early 80’s interest rates were at their all time peak above 18% on a 30 year mortgage. Proceeding ahead another 10 years, the same 30 year mortgage rate dropped to 10% in the early 90s. Over the coarse of the last 20 years, the interest rates have held flat while slowly dropping to become what they are today hoovering between 4% and 5%.

In order for you the buyer to take advantage of these historic lows, you will need decent credit and a down payment, unlike in the mid 2000’s where the sub prime and predatory lending allowed almost anyone to qualify for a loan. According to the Federal Reserves – Senior Loan Officer Opinion Survey on Bank Lending Practices, banks have remained unchanged in tightening their standards in January and April 2011 reports. As banks loosen their standards and the economy stabilizes, interest rates will begin to rise making it harder to get the low rates that are with us today.

Great Long Term Investment

Buying a home means different things to different people. Some people buy a home for more space. Others buy a home for convenience to work or family. No matter what the reason, the main reason home buyers think financially about buying a home is for a long term investment.

Owning a home, unlike what some might think, has never been a short term investment where you are able make tons of money. According to the index of single-family home prices provided by the National Association of Realtors, home prices have increased steadily from 1970 to around 2011, with regards to the huge spike and decline in values from 2000 to 2008.

Buying a house in 2011 may prove to be the best time to build equity for your future. Equity in real estate is defined as the difference between what a property is worth and what the owner owes against that property. A huge chunk of wealth for most people lies in the home they own at some point in their life. An advantage to buying a home in 2011 is the ability to build equity faster through years of ownership by taking advantage of low interest rates, an over supply of houses, and the ability to get below market prices on properties. Other possible ways to build equity are by making improvements or buying in an area with large demand.

The Bottom Line

If you are waiting for the housing prices and interest rates to drop more, you may lose out on the best time in recent history to buy a house. Most analysts don’t expect any significant declines in the real estate market to effect these factors and claim waiting will cause losing out on a great opportunity. Today it is a buyer’s market, but like everything else in life, the buyer’s market won’t last.

Is It A Good Time To Buy A House?

Is now a good time to buy a house? That’s a great question. I’d like to answer it with a quote that my real estate mentor once told me. The best time to buy a house is when you need a place to live. I know that may sound a little silly, but the fact is, you buy a home to serve a purpose. When you need a car, you buy a car- when you need a place to live, you buy (or rent) a house.

In reality, though, there are two different answers to that question. It depends on why you are buying and what your intentions are. I wrote this article for those of you who are looking to buy a house as a primary residence. For those considering buying a real estate investment property, you can read my article titled good time to buy a house-real estate investment. The Fact is, if you are a real estate investor, or considering becoming one, the best time to buy may completely different from that of a retired couple looking to downsize after their 4th child finally leaves for college. You’ve heard what the media is telling you about buying property and you’ve read the newspaper’s roller coaster advice about the housing markets. No doubt your mom, dad, sisters, brothers, uncles, aunts, and your pet bird Petey all have their opinions too. So how do you determine when you should get serious about jumping into home ownership? First, lets look at the “buy at the bottom” idea.

Buy at the bottom? Great idea right? Sure, I’m all for getting a good buy on property. The problem? Knowing when we’re at the bottom. How do we do that? Again, if you ask around, you’re sure to get many different, and some interestingly amusing advice. So I’ll answer that question for you from my experience…NOBODY CAN!

You might be thinking “wow, thanks a lot, that wasn’t real helpful.” My point is this, though; no economist, no guru, no loan specialist, or anyone else can pinpoint the bottom of the market until it’s long gone. Oh, yes, with hindsight we can determine when the bottom (or top) was, but not one of us knows it until then. For instance: The top of the real estate market in Roseburg Oregon, where I live, was approximately July of 2005. We didn’t have any idea that we were cresting in July, but we sure do now.

1. Rookie Buyer Mistake #1. Waiting around to take advantage of “buying at the bottom.” More often than not, the bottom flies by and that buyer ends up paying more for a house than they should have, or they get hit with a higher interest rate that ends up robbing them of the savings they did experience.

2. Rookie Buyer Mistake #2. Considering your house as the “largest investment you will ever make.” You home may very well cost you more than anything else you ever buy but it is not an investment! When you buy a house to live in, you are buying a place to call home, a place to watch the kids play in the back yard, a place to grow, laugh, and cry together in. Once you start considering your home as an investment, you’ve lost the touchy-feelies of family home ownership.

Think about it this way. When your last child was born and your family no longer fit into the cool two-seater, what did you do? Did you wait for the bottom of the mini-van market or did you go buy a mini-van? Don’t get me wrong, I’m all for getting a good deal on a home. I’m just separating the differences between buying a house as a home and buying as a real estate investment. My experience has been that a home buyer who looks at their purchase as an investment usually does not get the kind of outcome they were hoping for. In fact, many end up paying thousands of dollars more by waiting.

Why is now a good time to buy a house? Consider this scenario:

A house that can be purchased today for $150,000 (Roseburg average) with a 5% down payment, and is financed over 30 years would have a monthly payment of about $765 P/I. The buyer will (in this example and like most home owners) live in this house for the next 7 years.

Now lets consider together that the hypothetical buyer procrastinates and “waits for the bottom.” What if, while this buyer waits, the interest rate for a normal 30 year mortgage go up by a just 1%? This is not an uncommon expectation of many professionals, by the way. Let’s say, though, that prices did go down by $5,000 so the buyer was able to save $5,000 right?

Wrong! Even with a purchase price of $145,000, with a 5% down payment, and a loan amount of $137,750, the 1% increase in the interest rate actually makes his monthly payment higher than it would have been in the above example. The payment is now $826.00 per month, a difference of $5,124 over the next 7 years! So much for saving $5,000!

You see the problem with the “waiting for the bottom” thinking? My advice to you who are trying to determine when you should buy is this. Consider your family needs, job security, and look at the information we have right now to base your decision on. So what do we know now?

  • We know that we have super low mortgage interest rates right now!
  • We know that home prices are fantastic right now, equal to what they were in 2002!
  • We know that if we aren’t on the bottom of the market that we must be very close.
  • We know that if we wait, we could potentially end up costing us more money than we might possibly save.

IS NOW A GOOD TIME TO BUY A HOUSE? My opinion is Absolutely YES!