The Market's Spring Thaw?
Based on the chatter I'm hearing and the results of this blog's latest, highly unscientific Weekend Poll there are a lot of people suddenly warming to the idea of launching a house hunt. Suze Orman even said on NBC's Today Show that she's starting to think it's now the right time for people to start looking at real estate. (The comments came at the end of a segment about stock investing. However, I think Orman is highly unrealistic in advising first-timers to wait until they have saved enough to make a 20 percent down payment. Most first-timers simply don't have that kind of dough.)
Here's a bit of advice for people who find themselves warming to the idea of launching a house hunt:
Don't be rushed. Low interest rates are probably going to be around a while, so there's no reason not to think through a deal carefully.
Sell first, buy second. That's always the less stressful way for current owners to structure a deal, and it's really critical now. You do not want to get stuck paying mortgages on two homes. I've been there, and it's not fun.
Be careful with condos. Fannie Mae and Freddie Mac are tightening their rules for condo loans (more on that later this week). And some condos are running into real financial difficulty thanks to dues going unpaid by owners headed into foreclosure. Examine the condo documents carefully. Pay an accountant or lawyer to help if you're not familiar with financial statements. Just make sure to review that condo's financial documents before your purchase offer becomes final.
Don't blow all your savings on a down payment. This may be the most important point, especially with unemployment rates still rising. Even after closing day, you still have to have at least three months worth of expenses in an emergency fund, in something easily accessible such as a bank's money market account. (Six months is better, of course.) You never know when a layoff, a leaky roof, or some other serious setback will force you to tap that cash. Orman--and all financial advisors--stress this as well. I think it's much more important than putting all you cash into the down payment.
Add to the discussion with your own Report From the Field! Are there really more buyers out there, or is it just talk?
Posted by: Anondale | March 23, 2009 9:50 AM | Report abuse
Posted by: MaryTClark | March 23, 2009 7:03 PM | Report abuse
Posted by: EMoraru | March 26, 2009 4:21 PM | Report abuse
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