I think we can all agree one of the biggest lessons learned from the housing market crash in 2008 is that we must be very careful not to over extend ourselves when it comes to spending. No longer are we in a time when we buy first and think later (at least I hope so). Many of us have risen to the occasion and are now more informed consumers and thus consider the long term implications of such major investments/purchases as a home.
With that said, I came across an interesting article titled, “Are You Really Ready To Buy Your First Home”? The article spoke on the notion that before signing on the dotted line one should consider his/her personal goals and determine whether or not the timing of an investment/purchase will interfere with the ability to accomplish set goals. For instance, if you’ve planned to back-pack across Europe, climb the pyramids of Egypt, and safari through Perth, Australia within the next 2 years, then buying a $300,000 home in 6 months may not be the best move. Instead, postpone the purchase of that dream home until you’ve curbed your travel appetite. Only then, when you’ve unpacked and have your photo albums in place, should you move forward in making such a purchase. Don’t Get Caught Up In Yesterday’s Time Line Many of us are guilty of being caught up in the fantasy timeline of how our lives should play out. Society tells us first comes love, then marriage, then a mortgage… typically on a starter home. A starter home is “….a house that is usually the first which a person or family can afford to purchase, often using a combination of savings and mortgage financing”. Starter homes are typically smaller in square footage than your second home and come in various forms such as single standalone structures or condominiums. While this is a great first step to becoming a responsible adult (so they say), consider jumping out the gate into an income generating investment property. Think about it; why commit a chunk of your life savings and future earnings for the next 10 to 15 to 30 years on a home you only plan to be in for the short-term when you can buy your second (or third) home first? If you’ve read or heard anything about today’s housing market you know the days of flipping houses (buying, fixing up, and selling for profit) have come and gone. Therefore, prescribing to old standards may leave you and your growing family with a home and long term mortgage payment you will soon get tired of. Stretch Your Imagination & Think Long Term Instead of buying the starter home we’re all told to dive into after the wedding, think BIGGER. Contemplate buying a home that you plan on having for a longer period of time (no less than 7-10 years) and build from there. Today’s market is undeniably scary in the sense that you can buy a house for the price of a used car. Some critics argue buying a house and being a homeowner doesn’t hold the same value today compared to 30 years ago; that nowadays homeownership is much more complicated and by simply renting you avoid headache in the long run. My response: I concur. I agree owning a home and investing in real estate is a huge responsibility that should not be taken lightly. You have a choice to own a home and if you choose against it, it doesn’t make you any less of an adult nor irresponsible. However, if you’re interested in acquiring real estate – and more than one over the course of your life – and are ready to handle the responsibility then you should consider buying your second home first. Here are three reasons why…. 1. Although prices are starting to creep back up, there are still many great deals throughout the United States and abroad. With low purchase costs as well as historically low interest rates why wouldn’t you take advantage? 2. Government agencies like the Federal Housing Administration (FHA) have loan and grant programs that support first time home buyers as well as veterans of the market. Programs such as the HUD 203K Loan provide financing of up to $35,000 to rehab and repair fixer upper properties. You should also research rehab programs specific to the city you plan to buy in. For example, the Neighborhood Housing Services of Chicago (NHS) has several programs including free homebuyer education classes, individual consultation, and mortgage pre-approvals. They also offer affordable fixed-rate mortgage loans for home purchase, rehab, and general home improvement to help update the safety and security of your home. 3. Increase your disposable income by acquiring your second home first and turn it into an income property. The funds generated through this could potential help pay for your “first’ home. The goal at the end of the day is to be comfortable knowing there are wonderful opportunities waiting to be seized. Dream big and know that you don’t have to have the debt of the world hanging over your shoulders in the form of a long term mortgage attached to your starter home. Instead you can plan for the long term and invest in your second home first, which is a risk that could leave you and your family in the winning circle! Till Next Time, Happy Living and Learning, The S.P. Team For more information on the featured article please visit the link below! Are You Really Ready to Buy Your First Home or Apartment? By BRIDES…Posts By BRIDES |Work + Money http://shine.yahoo.com/work-money/really-ready-buy-first-home-apartment-164900747.html
2 Comments
Robert
1/15/2014 10:26:59 am
Great advice. Gives me something to think about! Thank you SP team for the article.
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About The AuthorSolonge Robinson is a Co-Founder of Soldon Properties, LLC and proud contributor to The Soldon Corner. Archives
January 2020
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