5 Tips for Buying a Home During a Recession

by Shannan

may2007_house

Current economic conditions have made life challenging, to say the least for many families. At the same time, the recession has created some interesting opportunities for people who are interested in getting into the housing market. Mortgage interest rates are low, and the federal government is offering tax credits for buyers. What do you need to consider before you decide to take the plunge?

Here are five tips you need to keep in mind:

1. Consider Housing Costs

With interest rates currently at historically low levels, it may be tempting to put in an offer on a home that is a bit of a financial stretch for you. Along with the mortgage payments, you will also need to budget for property taxes and utilities. There will also be expenses connected with maintaining the property, even if you are not planning on doing any renovations right away. Consider these costs carefully before you make an offer.

2. Making a Long-term Commitment to a Home

While right now may be a good time to consider buying a home, keep in mind that prices may drop further in the short term. If you know that you will be staying put for several years (at least five), then now is a good time to think about buying a home. On the other hand, if you see yourself moving in the next couple of years, you may want to hold off on committing to home ownership for the time being.

3. Think of Your Needs First

If you have checked your budget numbers and you decide that you can afford a home and you will be staying in one place for the foreseeable future, you can start figuring out what features are more important to you in a home. Some home buyers want to live in a certain area or close to shopping and recreational facilities. People with children will want to find out about day-care facilities, schools, parks, doctors’ offices, etc., in relation to the house they are considering. These kinds of the things are “must-haves” when you are looking for a home.

4. Your “Wants” Are Not Needs

Just about everyone has a list of things they would like to have in their “dream” home. As long as you are willing and have the means to pay for them, it’s not a problem. You may want to keep in mind that it’s perfectly all right to get into the housing market with a starter home, build up some equity, and then move up to the big honking house that you really want. You may “want” the home theatre, whirlpool tub, and granite counter tops, but do you really “need” them?

5. Shop Around for the Best Mortgage

There are many options available to home buyers who are looking for a mortgage. Not only are there many lenders offering financing, but there are different kinds of mortgages offered by the same lender. Consider the interest rate, payment options, and amortization period, and any required fees before you sign any mortgage documents.

The recession may translate into a buyer’s market, but you still need to be smart about it. Consider your budge, how secure your job is, and separate the things you must have from the stuff on your wish list to make the right choice for you.