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Millionaire Money Habits

August 20th, 2009 at 7:03 am

Is Now a Good Time to Buy a House?

The economy has obviously been in a continued slump, and despite random predictions of an eventual recovery, there’s no definite end in sight.  Everything including the housing market has taken a hit, and that might leave you wondering if now is a good time to buy a house.  Actually, yes, it is a good time to buy a house, and it doesn’t matter if you’re buying your first or fifth home (although first-time buyers can get a little better deal right now).

Plan to Stick Around for a While

First, regardless of your situation, you should be planning on remaining in your new home for at least five years.  If you’re considering buying a home that you may or may not stay in very long, you may want to look for a different house or simply wait out the economic downturn; you won’t get any value out of your purchase, and you’re likely to lose money when reselling so soon.

Better Bargaining With Sellers

Beyond that, you can find quite a few bargains right now.  It has been difficult for many sellers, leaving them more open to price negotiation.  While some may try their hardest to stay close to their desired price, others may be more desperate to simply get rid of the house at the best price possible, especially if their house has been listed for a frustratingly long time.

Foreclosed Homes

And then you’ll also encounter foreclosed homes, where the homeowner has been unable to make their own payments; it’s a sad situation for them, but it does leave a good deal on the table for you.  You just need to learn the right time for you to jump at it—that’s going to mean a little homework for you, an important step in order to avoid extra financial surprises.

First-Time Homebuyer Tax Credit

If you’re looking to buy your very first home, you get an extra benefit if you act before December 1, 2009.  You could qualify for a tax credit of up to $8000.  Of course, there’s some fine print to read ahead of time (you can start with for all the information), but you also do not have to pay it back in any form.  This could help put the house you’re hoping for more within your reach.

Good Credit Rating

Finally, mortgage rates are exceptionally low in many areas, which means you’ll pay less interest on your loan than you would if the economy were doing well.  However, no matter what kind of deal you find, you still need a high credit score.  As prices and interest rates have loosened, credit restrictions have tightened.  You want to make sure your score is a minimum of 720, higher if you can manage it.  Your deal might be canceled out by a lower score.

Home prices may rise again at any point along with interest rates, so now is a great time to look for a new home.  As always, though, make sure your credit score is excellent and that your job is steady right now, and don’t forget about your tax credit!

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