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Coping in Tough Times: Buy a house now?
Is now a good time to buy a bigger house? I’m worried about what would happen if I get laid off.?
Lots of people are taking a look at buying now that prices have fallen in South Florida. Let’s get specific, because that will help you decide.
Start by figuring out what the potential mortgage payment will be on a new loan — not just the principal and interest. Realize that your property tax bill will go up along with your homeowners insurance premium when you buy a more expensive home. Both of those will add a substantial amount to your monthly expenses.
Now, do a “worst case” scenario to see what you could afford if you or your spouse lost a job.
Next, consider your cash situation. You may have enough to make a down payment, but what about emergencies? Remember that owning a home means fixing something very often. And the more the house costs, the bigger the repair bills.
Note to first-time buyers: You can take an extra $7,500 federal tax credit if you buy by June 30.
Harriet Johnson Brackey, the personal finance writer for the Sun-Sentinel, has been an award-winning business...
Comments
Couple of other points. If looking at a "bargain" of a foreclosure refer yourself to the bcpa.net. Florida law allows foreclosures to be taxes based on COMPARABLE properties in the community. SO if you get the property at $250K but your neighbors paid $400K..guess what you will be taxes at $400K..approx $8K a year vs. $5K!
Your insurance on a foreclosure also will not be based on what you paid for the property but your replacement cost!
Even with 20% down, prices currently are not expected to stabilize. Meaning buying today can still put you underwater by next year. Safe bet..WAIT..don't buy right now..rent for another year(plenty of bargains out there. However look at the public records, available online, to make sure your landlord insn't in foreclosure) and save your money. When prices finally do stabilize they will not be jumping back up like before..would you rather pay 1-3% more or have lost your 20% equity.
The safe bet..sit on the sidelines just a little bit longer.
Posted by: Jamie | January 13, 2009 6:41 AM