Friday, March 7, 2008

To buy or not to buy...

...that is the question (of which I get asked ALL the time!). So, here are 5 reasons to buy and 5 reasons to not buy:


1. Prices in the DC area are relatively stable compared to the national market as a whole. Some areas are hotter than others (we still have competing bids on certain properties - I do bear witness!). Don't wait for the "bottom" to hit...we may be there already and it is best to get in before the market starts turning up.

2. You plan to own the home for at least 5 years. There is no denying there is a slump right now, but if you know you're going to be in a property for more than a 1-2 year stint, you will certainly ride out any down turn and come out on top when you are ready to sell.

3. Your rent is close to what you'd pay in a mortgage payment. If you are ready to buy, this scenario will give you the one benefit rent doesn' deductions!

4. You know what you want and it is available. You know what neighborhood you want, what type of house and a price range you're comfortable with and we wave our wand and it's on the market...BUY IT! If you like it, others will too and there will always be a demand for it.

5. You've built equity in your home or have a low mortgage balance that isn't giving you the tax benefit you would like...2 scenarios...if you can downsize and make a profit, do it...or if you want to use the equity to "buy up" then do it. Don't let the equity slip away or risk paying higher prices for what you really want to purchase.


1. You are in a home that you've owned less than two years. You probably are lacking in equity if you financed and can get hit with capital gains taxes.

2. You job isn't secure or you're considering a career change that may temporarily impact your cash flow. I think that is pretty self-explanatory!

3. You only plan to be in your new home for a few years. While it is not necessary to buy at "the bottom," it is best stay in your new home long enough to ride out any decline value.

4. You do not have good credit or no money for a down payment. First, bad credit = HIGH rates (and in some cases, no mortgage qualification); second, many loan products now require a larger down payment where if you don't have the cash, you can't buy.

5. You have a house to sell in a hard-hit area and won't get any equity out. It may be worth waiting it out if you can't rent your current home to cover the mortgage payments, don't have the means to hold both mortgages until your home sells, or you are in a negative equity situation and do not have the means to pay off your loss.

Well, that's is the short and long of it. If you want to buy or are thinking about it, review these reasons above and see where you come out. It's not all or nothing, just set your expectations in line with the market and go from there!

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