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Before buying a home

Interest rates are at all time lows and nationwide (US), home values are down 25 percent from their peak, meaning affordability is greater than ever.

So, is now a great time to buy? It can be. But, before you start home shopping, ask yourself these 4 important questions:

Can I really afford to be a homeowner?

No question about it, owning a home is expensive. Not only is it ideal to put 20 percent down in order to secure financing with good rates and avoid Private Mortgage Insurance (PMI), but you'll also need to factor in lender fees and closing costs associated with your loan. Money should be set aside for inspection costs as well. It's also important to think beyond the initial upfront costs that go into purchasing a home and the monthly mortgage payment. Your utility costs will most likely increase. With many homes, homeowners will need to purchase major appliances, and are then on the hook to repair those appliances when they break. Not to mention, all of the unexpected costs associated with normal wear and tear (a few hundred dollars to replace a faucet) and big emergencies like a leaky roof, which can run into the thousands. Plus, if you buy an old home in need of serious help, your wallet will be constantly drained.

Am I ready to plant deep roots?

Conventional wisdom used to be that if you stayed in your home at least five years, buying would be a smart investment. That's no longer the case. Zillow's just-released Q3 data shows that home values likely won't hit bottom until mid-2011, at the earliest, and will stay relatively flat for several years thereafter. The good news is that if you intend to stay in your home seven to 10 years, you can ride out the market's inevitable ups and downs until we arrive at more historically normal rates of appreciation (typically 3-4 percent a year).

Is there a community that fits my lifestyle today and for years to come?

If you are thinking of starting a family, research the local schools, check out the local parks, and see if there are other young families in the area. If you take public transit, contact the local municipalities to see if any changes are slated for transportation in your area. If you don't own a car, will you need to buy one? Or, does the area have a high WalkScore? If you changed jobs, would your commute drastically change? If you are planning on expanding your family, could you expand your house? Check with the city to see if remodeling or home additions are allowed. Remember, if you are going to plant deep roots in this home, the home as well as the community need to meet your lifestyle for years to come.

Would I be better off renting?

Renting has lost a lot of its stigma. This is unsurprising, given the roller coaster ride we've been on these past few years. In fact, 25 percent of potential movers say they plan to dual track their home search -- meaning, shop for rentals and homes for sale at the same time. Thankfully, it's easier than you think to figure out whether renting might be a better option for you. Zillow's search by monthly payment feature enables home shoppers to easily compare homes for sale and homes for rent by monthly payment to figure out which makes more sense in their area.


Dy Associates is an Oakland Real Estate company specializing in commercial, home and investment property in the Oakland and East Bay Area. We provide real estate services including buyer agent, seller agent, short sales, commercial and investment acquisitions, loan facilitation, hard money lending, financing assistance property management. Articles are provided as information only. We do not provide legal or general investment advice.


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