Five Signs You Are Ready To Buy REAL ESTATE

Dated: December 8 2016

Views: 183

There are a number of great reasons to own and invest in real estate. As with anything of value, an honest evaluation of the risks involved should definitely be conducted before making an investment. Whether for personal use or for profit, the ever evolving real estate market has certainly taught us that ownership is a "much involved" opportunity.

Home ownership in America according to the Census Bureau is down to 65% from 69% in 2004. Although tighter lending standards, economic uncertainty, and in many cities high home prices are partly to blame, many would-be buyers are staying out the game simply from lack of industry savvy. However, with mortgage rates lower than they have been in years and sure to rise soon...it would only be opportunistic to take advantage of the options available and take on home  ownership sooner than later. 
5 SIGNS YOU ARE READY TO BUY REAL ESTATEWell here are five questions to ask yourself before you take the leap!


1) Will I be here for a while?

The rule of thumb is...If it won't matter in five years don't give it more than five minutes. You can apply the same concept to your home buying decision making. It would be a good idea to buy if you plan to stay put for at least three to five years. These days, many financial advisors are recommending an even longer window. I'd say at least seven to ten years because the transaction costs of buying a home are significant.

When you buy, there are the costs of securing the loan, closing on the sale and moving, not to mention all of the miscellaneous items that can easily add up. You should plan to be in your home AT LEAST long enough to break even from all the costs incurred from your purchase.

Also, as important are the numbers, is whether you’re ready to tie yourself down to a particular home in a particular location. Just like the economy fluctuates based on what's going on in the world so does a particular city or area. So be sure you keep this in mind when making your investment.  “Depending on what you do for a living and the job market in your area, you may be better off continuing to rent,” says in Charlotte, NC planner Ann Reilley Gugle.


2) Are my finances in order?

If you’re already struggling with your finances, buying a home will only contribute to your money woes. Ideally, you’ve saved at least 10% for a down payment – keep in mind you’ll have to pay private mortgage insurance if your down payment is less than 20% — and that’s in addition to saving for retirement and building any other investments you may have or intend to put in place. 

If you’re not in a position to save for a down payment, you probably aren’t in the position to buy your own home. Purchasing a new home is a clear challenge of will and requires you to prove you have the discipline and ability to save money. The real estate crash of 2008 is a clear indicator of how that important principle had not been prioritized.


3) What are the hidden expenses and what happens AFTER taxes?

If your finances are in good standing and you think you're ready to rock and roll in real estate, the next step is to get a realistic estimate of what you can expect to spend, and how that breaks down monthly. Your real estate agent as well as your lender are ideal for giving you the most accurate assessment. 

Now there are great tax advantages to home ownership. If you itemize your deductions – as many homeowners do – your mortgage interest and property taxes are deductible. Down the road when you sell, moreover, you can realize up to $250,000 in deductions (double that if you’re married) before you owe capital gains tax. Be sure to consult a tax professional for concise and accurate information on how your investment with affect you financially based on your local legislation.

There are many additional costs of homeownership that new buyers tend to overlook . A solid and consistent budget of both money and time will be required to address routine maintenance costs, as well as big-ticket items, such as leaking pipes or a roof that may need repair. You have to be prepared for the occasional pressures that will inevitably come with your new purchase.


4) What’s happening in my market?

We're always hearing economists talk about real estate in national terms, but the market varies greatly from one city to the next, even from one neighborhood to the next. Although home prices in most U.S. cities are still relatively affordable, some cities have seen their home prices bounce back to the big boom prices before the big crash. Also to consider in many cities, the rental market is as competitive, if not more competitive.

Nationally, half of all renters are spending more than 30% of their income on housing, according to the Joint Center of Housing Studies of Harvard University, up from 38% of renters in 2000. For renters, an improving economy is a double edged sword...as their incomes rise so does their rent.

So one obvious benefit of owning, assuming you plan to stay put for a while and lock in a fixed-rate mortgage, your costs should remain relatively consistent from year to year; and in time will go down. For many buyers, that’s all the reason they need to get off the fence and into the housing market.


5) OWN IT!!!

Out of all the great reasons to own real estate I've found that pure sense of "OWING IT" is everyone's favorite...Knowing that your hard work and efforts attributed to making this major thing happen is most rewarding! Preparing for such a purchase as a home is no easy task and to pull it off is a major accomplishment. Yes there are financial opportunities and potential to earn profits, but the ability to say I OWN IT is priceless!!!


If you or anyone you know is weighing home ownership as an option, I hope this helps! There are numerous benefits to making such a major investment but at the end of the day you have to determine what elements of ownership matter to you the most. There are endless opportunities in and around your area so do your research and don't miss out. 


Don't hesitate to connect with our experienced and professional team for all of your real estate and investment needs.

www.andrea.themarkquinichettgroup.com


Andrea Washington

Realtor

The Mark Quinichett Group



Realty Pros 

4624 Wisconsin Ave. NW

Washington, DC 20016

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Andrea Washington

In addition to being a licensed real estate salesperson in MD and DC, Andrea is a Credit Repair Agent, certified Notary Signing Agent (underwriter appointed) and Investor. +Get connected to resour....

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