With interest rates at record low levels and a lot of inventory to move, now may be the perfect time to get in the market and purchase that home you've been looking for. Even though now may be a great time to buy, prospective buyers should keep the following 5 tips from the American Homeowners Foundation and the American Homeowners Grassroots Alliance in mind as they begin the home buying process.
Tip 1- Buying a home is one of the best investments you can make. Home equity remains the largest single savings vehicle for most Americans. In addition to the tax incentives of homeownership, and the ability to tap into your home equity if the need arises, buying a home is a wise and prudent investment for most people.
Tip 2- It is important to buy a home that will go up in value. Slow, steady home appreciation has been the rule over most of the nation's history, and many real estate investors became quite wealthy in that environment. They did so by carefully analyzing the appreciation potential of their investment, and they invested for the long term. You should too. Even if you plan on living in your home just a few years, you will want it to have gone up in value when you put it back on the market.
Tip 3- Use a buyer's agent. If you're going to work with a real estate agent, contract with a buyer's agent rather than with the seller's agent. A buyer's agent is paid by you and has a duty to represent your interests, while the seller's agent is paid by the seller and represents the seller's interests.
Tip 4- Choose your agent wisely. If you are using a real estate agent, look for one with experience in working with buyers, with knowledge of the neighborhood(s) you are considering, and who does not have a reputation for being 'pushy.' The purchase of a home is a serious long term commitment on your part and a good agent will recognize that buyers need time and patience so they can satisfactorily sort out the myriads of factors involved in a purchase decision.
Tip 5- Current home prices are a less important consideration than interest rates. Try to buy and/or sell when interest rates are low. The amount of mortgage you can afford (and thus the price of the home you will consider) will change as the interest rates rise or fall. A certain asking price may sound expensive to you, but at a lower interest rate you might be able to afford it. You may own several homes over your lifetime, and the factors that will limit or increase the value of the home you will be selling will similarly affect the price of its replacement. Since those factors largely wash each other out, interest rates remain the most important factor.
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