I just received an email from someone who registered on my website to search for homes for sale. Her question was “I still have a couple of debts that I’m trying to payoff first, let me know if you think I should just wait or go for it.”
That is a hard question to answer in an email. Buying a home is a big decision. If you get it wrong, you could find yourself under financial pressure that you do not want in your life. If you get it right, especially now, there could be big benefits involved that could make your financial position better in the future.
I thought there might be others out there pondering the same issue, so here is a copy of my email reply…
Paying off debt is always a good thing and is something I typically counsel my clients to do as part of their overall strategy. However, there are a few things going on right now that should be considered as well.
Home prices are as low as they have been in years and there is much data that suggests that prices have begun to stabilize. The next direction for prices is very likely upward, so the price you get now is probably the best price you will be able to get on a home.
Interest rates are still very low. Everyone thinks that inflation will be a big concern in the months and years ahead which will cause interest rates to rise. If rates go from 5.5% to 6.5% that would increase the monthly payment on a $150K mortgage by $96 per month.
And lastly, if this is your first home, or if you have been renting for the past 3 years, you could qualify for an $8,000 tax credit.
Waiting to buy might make sense, or it might not. The best way know what advice to give you relative to whether to wait or buy now is to have a conversation about your situation. If you’d like to do that, just give me a call at 919-602-700.
I look forward to speaking with you!
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