SHOULD I BUY NOW OR WAIT?
Buying a new home is probably the single biggest decision most of us make in life. It can be a lot of fun but it can be challenging too. When you're moving, this is especially true, since you may have a short time within which to purchase. In addition, if you're moving to another city or another country, there is planning and research involved as well.
Take your time if you can. Never rush into a purchase because you feel pressured to buy fast. But of course, there may be times when the situation dictates your timing. There could be reasons, such as an expanding family, baby on the way, relocating for work reasons - these are all valid reasons for having to find a home in a hurry.Or, it could be that you are trying to buy at a time when prices are in your favor. Even then, do some planning, and ask some questions. It may be wiser to rent. Here is a Rent or Buy Calculator to help you determine if renting first makes more sense for you.
Other important considerations are whether to borrow and pay interest on your home, or wait and save more till you can finance more of the home yourself. And what if you don't have sufficient funds for the down payment?
So the big question now is: Should you wait till you've saved enough for a down-payment on your new home, or find some way to come up with the money - perhaps borrow at a higher rate to finance your down-payment? To help you decide, here are some of the advantages and disadvantages of each decision.
First, here are the advantages to borrowing for your down-payment so you may purchase your home sooner:
- You can stop paying rent sooner and get into a home faster - less money sunk into rental. Pay off your own mortgage instead of someone else's.
- You can buy at a time before house prices rise beyond what you can afford. You can take advantage of the housing slump, and you can probably afford more house for your money.
- You will start paying off your home earlier. This can lead to substantial savings in the long run.
These are the disadvantages to borrowing for your down-payment so you may purchase your home sooner:
- You will in all likelihood be paying more interest as the kind of loan you will be trying to get for a down-payment will tend to carry a high interest rate.
- You may be in danger of taking on more debt than you can service.
- In the unfortunate circumstance when you are forced to sell at a loss, you may be stuck with the problem of paying back your high-interest loan when you may not have the means.
Here are the advantages to holding off and saving for your down-payment:
- You can avoid paying a high-interest loan.
- You will not have to worry about the risk of trying to pay back the loan if you are forced to sell your home in a hurry and cannot recuperate your costs.
- You will save the costs for now of paying mortgage insurance.