Just about everywhere you turned the past couple of years you heard cautions about today’s economy and the fact that buying a home might not be such a good investment any more. Well, I have a completely different take on all of that. Now I am not an economist nor am I an investment counselor but I know one thing, a home is a critical part of my family’s stability and I want the best home I can afford for the money. So with that in mind, even if the naysayers are correct and that a home as an investment is not what it used to be (I completely disagree by the way) it is still important to my family. It is where my children will grow up and where my wife and I will live out our years as we enjoy our grandchildren. So in my mind, if I can take advantage of today’s economy to improve my position for my family I am going to jump on it.
Now let’s look at the current economic situation. Home values have dropped in most areas of the country. Some have dropped dramatically and others have been less affected but still seeing home decrease in value. But here is one thing to keep in mind: it is not just your home that has dropped but the whole market has been affected. So if I live in a $200,000 home and it has dropped by 10% then I have theoretically lost $20,000. But the $400,000 home has also been affected and so that home has dropped by $40,000. Now if I could find a way to move up to that $400,000 home, when the market turns back around, I could not only gain back my $20,000 but double my money.
Now how can I do this? Keep in mind that when you qualify for a home it is not based on the total value of the home. It is based on the payment amount. So if you have qualified for a payment of $1500 per month based on your family income, then what ever that $1500 will buy is what you will qualify for. So what you want to pay attention to is the current interest rate. We have not only seen homes drop in value but we have seen the interest drop at the same time in order to try to continue to stimulate the market. So if we can get past the fact that the market has dropped by 10% and see it more as a buying sign just like we do with the stock market, then we can possibly “get your cake and eat it to.”
Let’s say that your current interest rate on your current home is 6% and with today’s economic conditions you could get a loan at 4%. That two percent drop could get you into significantly more home for a fraction of what it would normally cost because we are in a double dip economy with both home down and interest rates at all time lows. So again, the key is to look at what sort of payment you can afford and then look to see what that sort of payment will get you.
Now don’t forget a new home and even possibly a custom new home. Builders are making great deals today to keep busy and so in some ways we have the potential of a triple-dip economy. So why not "go for broke" if it turns out you can qualify. That is my thinking because I still believe in America and have confidence that things as they always have will turn around and thrive and I personally don’t want to one of those sitting back later and saying “if only I had taken the plunge”. And I don’t know about you but I have said that far too often in my lifetime.
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