I’ve been a renter for the past ten years, and I didn’t even realize it. That’s because if I sold my home right now, I’d walk away with little to show for it. I don’t regret buying a home in general, but I do regret that we bought into my particular neighborhood.
The truth is, I don’t even regret when we bought a home even though we purchased ours during the housing bubble. If I calculate the numbers, I realize that I can’t sell my home without practically giving it away. I recently read a USA Today article about three reasons not to buy a home right now. I think it’s a fine time to buy a home as long as a person buys the right home in the right neighborhood.
I regret that we didn’t think more carefully about our major purchase decision almost ten years ago. In fact, we put money down to reserve our lot at the sales office before we even drove by the subdivision because of the buying frenzy in 2005.
Buying with the schools in mind
The article suggests buying during the “off-season” instead of during the busy spring and summer months. Obviously, there are more buyers with school-age children trying to get into a better school district.
I bought a home in a school district that isn’t so great, although there is a great community college in our area. Even if my children weren’t going to attend the public schools in my area, I should have considered the effect the schools would have on my resale value.
It’s more important to pick a good location rather than worry about timing.
Getting a better interest rate
When I purchased a townhome at 30, I didn’t have a perfect credit score. I did pay a slightly higher interest rate because of my credit. With my second home purchase, I got a better rate. It wasn’t until we refinanced when our credit scores were near perfect that we achieved our low-interest rate of 2.75 percent.
The USA Today article suggests improving your credit score before buying a home, but I think it’s more likely overall interest rates will go up anyway.
Saving up cash to buy
I only put down 3 percent on my townhome purchase and walked away with a $30,000 profit in two years. With our single-family home, we put down 20 percent.
Yet, we would be walking away with nothing if we sold. People worry about paying private mortgage insurance or PMI, but in most cases, that extra cost is dropped once the home’s value goes up.
The more important thing to do is to buy a home that will actually go up in value rather than a home that plummets in value. I put 20 percent down but ended up with negative equity because of my Florida neighborhood.
I hate to admit it, but the old real estate cliché about “location, location, location,” ended up being true for me. If I had picked the right location, my home would be worth more than I paid for it. In the future, I won’t worry as much about interest rates, our credit score, or our timing as much as the neighborhood.
