Nobel Finance Sydney – Money Matters Newsfeed

By Peter Dejoseph

Many people come to me now with the question, should I buy now or rent for a while? That’s a great question and there are many things to consider, regardless of where the real estate market is going.

What is your personal situation, where are you going to be in 2 years, 5 years, or more? Are you looking for a house to live in for the rest of your life or are you planning to move again in the next few years? Are you financially ready to put a 10-20% down payment when you buy a home or do you need 100% financing? So many things to consider so let’s look at them one at a time.

Let’s look at how long you plan on living in this house, this is very important factor right now. Over the last few years we have seen real estate prices increase at a record pace, this is not normal and now some areas are feeling the pain of having the market decline in price. The prices have come down some in many areas and there are some good opportunities to buy property out there, remember you never buy exactly at the bottom and sell at the top, getting close is what is important. If you are planning on staying in a home for a while a purchase would be a good idea from this perspective, prices will eventually go back up and they may come down a little more first.

Are you financially ready to buy a home? With all of the pressure in the lending markets, getting financing is going to be much more restrictive then it has been in the past few years. With the increase in foreclosures and number of banks that have gone out of business over the last 2 years, (visit www.ml-implode.com for up to date numbers), you are going to have to have higher credit scores, provable income, money in the bank, and a mortgage broker who has many lenders and financing programs available to help you. The 100% financing programs, MTA and Option ARM programs, Adjustable rate and interest only programs where you could “state” your income are vanishing from the market as quickly as they appeared, what is important now is good credit, money in the bank, and provable income.

Do you need to save up some money for a down payment? Is your credit score not so good and you need to do some things to raise your rating? Did you start a new job or business recently and the money just isn’t there yet? Then maybe renting for a while could be the plan for you for now. With the number of homes for sale in the market today, many of which are vacant because they were investment properties or people just moved anyway, there are a number of good rental opportunities. It is very likely you could find a home in the neighborhood you want to buy in, to rent for less than you would pay to purchase. Many people are struggling to pay there mortgage, taxes, insurance, and HOA fees and would welcome any help at this point to avoid a foreclosure. You could help them while they need help and at the same time you could live in this neighborhood and see if you like it for a year or 2 while at the same time saving money to buy your own home. Maybe you could work something out with the owner to buy there home at that time and get some of the rent credited towards your down payment.

The most important thing to do is to find a realtor and mortgage broker that will be willing to guide you as a consultant to what is best for you, not for them. Find a good financial planner to help with a budget and a plan to save the money needed to buy your home and in a price range that is affordable to you. Buying more home than you can afford is setting yourself up for disaster and a possible foreclosure.