To Buy or Not to Buy, That is the Question...
By James Sarles
Oct 19, 2011 - 1:29:18 PM
“TO BE OR NOT TO BE”
is the opening line from William Shakespeare’s play Hamlet written
in 1600. If Shakespeare was a Real Estate Agent in Freeport he might
ask the question TO BUY OR NOT TO BUY that is the question.
Many people have asked themselves this question especially in these
uncertain economic times. While each option of renting or owning has
its benefits, the decision to purchase a duplex, condominium or house
as opposed to renting, is complex and based on a number of factors.
Nearly everyone believes buying a home today is a good financial decision.
The question that remains is whether or not NOW is the right time to
purchase a home for
For most people, deciding
to purchase a home is the largest financial decision of their lifetime.
Before making the jump into home ownership, potential home buyers should
consider the “soft” lifestyle issues as well as the “hard”
financial ones. In Rotary we have the 4 way test. Is it the truth? Is
it fair for all concerned? Will it build good will and better friendships?
Will it be beneficial for all concerned? and in Real estate we have
four financial and lifestyle questions to consider when determining
if buying a home is the right decision for you:
Do you have a steady income?
At or near the top of every potential homebuyer’s mind is whether
or not they can afford to buy a home right now. Buying a home remains
a sound financial decision for those with documented income and a good
credit history, and a steady income can provide a strong backbone for
the initial down payment and future mortgage payments. Don’t hesitate
to speak with your real estate broker to determine all the “other”
costs of home ownership such as insurance, pool maintenance, power,
cable, water, gardener, general upkeep etc etc. Your real estate broker
can help you answer and uncover questions about the cost of homeownership.
Make sure you are know what your monthly operating costs will be including
your other living costs so you can budget properly. Don’t fool
Do you plan to stay in
a home for an extended period of time?
With proper planning, a home purchase has historically proven to be
one of the strongest investments one can make. Along those lines, it’s
imperative to understand that investing in a home is much different
than investing in a stock portfolio. Homes typically appreciate in value
over time while the owner builds his or her equity through monthly mortgage
payments. If you anticipate staying in a home for only one or two years,
it doesn’t necessarily mean buying is not for you, but you are less
likely to see a significant financial return on your investment. Based
on the current market and our closing costs you should be prepared for
a long term investment otherwise it does not make sense. Remember that
you will be responsible for ½ the government stamp tax ( 2% to 6% based
on the price) and your legal fees.(2.5%)
Do you plan to sell a house
in order to buy a house? Your local real estate agents can help
you understand current local market conditions and will help you make
smart decisions when listing a home on the market. If you do not currently
own a home that needs to be sold prior to purchasing a new one, now
is a particularly smart time to buy. Even with lenders becoming increasingly
more thorough in their approval process, mortgage financing is still
widely available for those with a steady income and solid credit. High
inventories and low interest rates give first-time homebuyers a tremendous
amount of opportunity and flexibility in our market.
How do your other options
compare? For renters, calculating month-to-month housing expenses
is as easy as inquiring about the monthly rent and average utilities.
The calculation gets a bit more complicated when considering the monthly
cost of owning a home. A real estate professional can help you understand
a range of financial considerations from annual service charges, to
hurricane insurance, to property taxes if you buy out of the “bonded
area”. And in 2015 we might be faced with property taxes like Nassau.
There is no one right decision when it
comes to renting versus buying a home. Each individual should take
the time to look at their personal and financial situation to decide
what will work best for their needs and lifestyle. To Buy or Not
to Buy that is the question. If you want to know who really penned
Shakespeares’s plays go see the new movie Anonymous which opens up
next week. Until Next week.
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