If you’ve looked at the recent housing market, you might be wondering what’s going on with home prices? Home prices have been steadily rising and are now near the levels they were when we had the crash. Are we in a housing bubble of some kind? Is there a reason to worry – or panic? Before you think the worst, let’s look at a few considerations that homebuyers should factor in with this market.
1. The Strength of the Economy
If you look at the strength of the economy, then you know that unemployment is still relatively low, job growth is strong and there are more new jobs in crucial areas like the tech sector. The FOMC or Federal Reserve, has slowly raised interest rates but at a trickle and this is a strong indication that the economy is growing at a steady pace.
2. Changes in Mortgage Requirements
If you’ve applied for a mortgage or you know someone who has, the process can be intensive to say the least. Because there are so many documents required including bank statements, pay stubs, employment records, credit reports and tax returns, banks are doing due diligence to ensure they have buyers who are well qualified. This is different from the housing crash in the past where many people had homes they couldn’t afford and were trapped in ARM loans they didn’t understand. With an increase in financial education, homeowners are more knowledgeable about their mortgage, budget and financial obligations.
3. Housing Risks and the Market
If you’re worried about purchasing a home because you’re unsure of the risks or the market, there are a few things to consider. A lot of people that got burned in the last housing collapse have been reluctant to take out a new mortgage because they’re concerned that they’ll have properties that won’t sell or they might see a decline in the value of their home.
To help you have more confidence in this market, you should consider your job security and the length of time you’ve been employed. Also factor in your savings and your nest egg. As long as you diversify your portfolio and limit your market risk, this can help you to have a more stable financial foundation even if there’s a decline in the market or another housing incident. You’re buying your home to make an investment that’s for the long run and with the current market conditions you can still capitalize on market appreciation. Just remember, the goal with home ownership isn’t to repeat the mistakes of the past, so if you’re only looking for chunks of properties to flip, you never want to invest over your head. Your home purchase is an investment that can give you tax savings for a long time to come.
Ultimately in trying to decide if you should buy a house, it depends on your current financial stability, income, potential mortgage payments and interest rates. Remember, a home purchase is a long-term investment and you don’t want to take out a mortgage loan that you can’t afford. If you are in a position where you don’t have job stability or if you’re concerned about your finances whether interest rates rise or fall, you may want to hold off for now.
For help with your mortgage related questions and if you need help with your pre-qualification requirements, contact Priority Financial Network.
About Marc Shenkman – Priority Financial Network
Marc Shenkman has been in the mortgage industry for over 25 years and has a wealth of knowledge to share with home owners and first-time buyers. Whether this is you’re your first mortgage or you are considering refinancing options, let Marc help. Contact Priority Financial Network today!