So you've been renting an apartment for a while and your friends areall buying houses and settling down to nice, quiet suburbanlifestyle. Is this something you should be doing too? To put evenmore pressure on you, every other evening news cast is talking aboutthe rapidly increasing value of houses in your area.
Before you rush out and buy the first house you can get a loan for,perhaps it would be wise to stop and decide if buying a house isreally what you should be doing. To help you, here are four things tothink about.
1. How long will you live there?
If your job requires frequent moves, or you are pretty sure you willnot be in the same city in five years, do not buy a house. Realestate prices do sometimes dip and if you move you may have to sellyour house at a loss.
2. Are you a Flipper?
Flipping is the art of buying a house, living in it for a time asyou fix and improve it and then selling it for a profit. You then buyanother house, live in it for a time, and sell it for a profit. Therisk here is similar to that in the previous paragraph; the resalevalue of the house may go down. So if you are going to be a flipper,be sure to buy a house you would want to live in for the next tenyears.
3. Does renting cost more than owning?
Sometimes you can find a house that is actually cheaper to own thanthe place you are currently renting. If you are purchasing a housepurely for the sake of less cash outflow each month, be sure toconsider all the costs of ownership: mortgage, insurances,maintenance, snow removal, etc. If you still find that owning is morecost effective than renting, go for it.
4. Is it what you really, really want to do?
Occasionally owning a house is what you really want to do, even ifit doesn't make economic sense. In that case, make sure you do yourhomework, consider the three thinking points above, and make the bestchoice you can. Buy the most house for the least money in the bestneighborhood.
Buying a house can be an emotionally charged time in your life. Itis also an enormous user of your resources. Take your time and beconfident that you are ready to move into another stage of your lifewhere you can be proud to say "This is my house."
Roger Sorensen
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