If..

[2boysmom]

If you had no debt, don't own anything, but have quite a bit coming from an inheritance, (enough to put a good down payment on a pretty good home,) would you buy a house in this economy?

[gracesteacher]

where i live yes i would do that with some land and I would also put some away for a "rainy" day

[theYoungerMrsWarde]

Yes. Land will never be worth nothing.

[Tap]

Most likely yes, in certain areas. It depends on many, many factors beyond that though.

 

If I planned to move in less than 2 years, No.

If I planned to retire to someplace else in 5 years, maybe, but more likely invest in property in the area I was going to retire in.

If the main breadwinner's job was secure and could easily afford the mortgage, upkeep, taxes etc on the home.

If I was planning a major family change in the next 2-5 years (like kids going off to college, extended family moving in or the birth of more children) that would affect my decision greatly.

If I wanted to own a home (I know a lot of people like to rent).

 

Etc

[2boysmom]

hmmm.

Possible big-life changes. We are weighing them.

Need to take care of eldery widowed mother.

All (2) kids going to college within the next 5 years.

Possible huge move from overseas back to US.

(WE are talking major.)

 

Do you have to have a job secure, (even if you've had the same job the last 20+ years) if you can put say 50% or more down on a home?

We dh and I are over 45, would need a job, but would prefer self-employment.

[creekland]

I would - and no, you don't need to have a job with an employer. You will need to prove your income as self-employed however (BTDT).

 

I do believe housing is at a low right now and is starting to go back up (most places anyway). Buying now would be a good investment.

 

HOWEVER, if you are going to move in the next couple of years, then it might not be a good investment as there are a lot of fees involved with selling and the price of the house might not go up enough to cover them.

 

If your kids are going to college soon, having money in a house can be better for financial aid - pending which form the colleges you like use. Fafsa doesn't count your house. CSS does. (This is if my memory serves me correctly - hubby actually does the financial aid forms in our house. I handle the rest of the finances so had to get him house and rental house data, but just for the CSS I think.)

[Mnemosyne]

It really depends.

 

Do you have an emergency fund large enough to account for a job loss, injury or death for the amount of months that you want?

Are you planning on living there at least 3-4 years (move before then, and you are likely to lose money on the house due to fees and such)?

Do you have a steady source of income? Do you have a game plan to pay for the house (as well as other expenses) if said income is lost?

Do you have a game plan for retirement, or would this house make you have to work longer than you want/can just to pay it off?

Do you want to be able to help pay for college (as well as fund your retirement), and be able to do so if you buy this house?

 

Houses aren't investments. It's going to depreciate, and it's probably going to cost far more than you may think. You'll need to toss money at it (taxes, repairs, upkeep, mortgage interest, commissions, insurance, etc). Sure, you may make some money, but don't expect to - the housing market may very well go down again by the time you're ready to sell. Don't base your plans on making money from this house.

 

All factors that come to mind, some may be more or less important to you.

 

However, house prices in many places in the US, at least, are fairly low. If you keep the other factors in mind and are ready for house ownership, it can be a very good time to buy.

[2boysmom]

It really depends.

 

Do you have an emergency fund large enough to account for a job loss, injury or death for the amount of months that you want?

Are you planning on living there at least 3-4 years (move before then, and you are likely to lose money on the house due to fees and such)?

Do you have a steady source of income? Do you have a game plan to pay for the house (as well as other expenses) if said income is lost?

Do you have a game plan for retirement, or would this house make you have to work longer than you want/can just to pay it off?

Do you want to be able to help pay for college (as well as fund your retirement), and be able to do so if you buy this house?

 

Houses aren't investments. It's going to depreciate, and it's probably going to cost far more than you may think. You'll need to toss money at it (taxes, repairs, upkeep, mortgage interest, commissions, insurance, etc). Sure, you may make some money, but don't expect to - the housing market may very well go down again by the time you're ready to sell. Don't base your plans on making money from this house.

 

All factors that come to mind, some may be more or less important to you.

 

However, house prices in many places in the US, at least, are fairly low. If you keep the other factors in mind and are ready for house ownership, it can be a very good time to buy.

 

 

 

thanks, this was very helpful. Good and realistic. I need that! : )

[2boysmom]

I would - and no, you don't need to have a job with an employer. You will need to prove your income as self-employed however (BTDT).

 

I do believe housing is at a low right now and is starting to go back up (most places anyway). Buying now would be a good investment.

 

HOWEVER, if you are going to move in the next couple of years, then it might not be a good investment as there are a lot of fees involved with selling and the price of the house might not go up enough to cover them.

 

If your kids are going to college soon, having money in a house can be better for financial aid - pending which form the colleges you like use. Fafsa doesn't count your house. CSS does. (This is if my memory serves me correctly - hubby actually does the financial aid forms in our house. I handle the rest of the finances so had to get him house and rental house data, but just for the CSS I think.)

 

 

Thanks, this is good thinking too. Encouraging about not needing an employer. I might PM you later.

[speedmom4]

"Houses aren't investments. It's going to depreciate, and it's probably going to cost far more than you may think."

 

 

 

I agree with almost all of these statements. Homes/land aren't going to depreciate except in very unusual economic times like the one we were just in. My house is still worth more now than when we bought it in 2003.

 

I do agree that homes aren't an investment but it is a good way to gain financial freedom if you are able to pay it off in a reasonable amount of time.

 

Good luck!

 

Elise in NC

[Mnemosyne]

"Houses aren't investments. It's going to depreciate, and it's probably going to cost far more than you may think."

 

 

 

I agree with almost all of these statements. Homes/land aren't going to depreciate except in very unusual economic times like the one we were just in. My house is still worth more now than when we bought it in 2003.

 

 

What I was getting at was that homes need to be kept up and, for lack of a better word, kept 'up to date'. If you don't do regular maintenance, repairs, etc, the worth of the house is likely going to go down.

 

Use of a house will lead to wear and tear, floors and roofs will need to be replaced, holes patched, carpets cleaned and replaced, appliances replaced, paint needs to be touched up. These costs add up over time, and if not taken care of will also lead to loss in house value.

 

There is also inflation to keep in mind, if the worth of the house doesn't rise at the same or better than the rate of inflation, the house value is technically going down (even if the dollar amount may be more). $150,000 in the year 2000 has the same buying power as about $204,000 today. So, if a house worth $150,000 in 2000 is worth less than $204,000 today (not even taking into account money put in to the house), it would have depreciated in value.

 

I probably could have phrased that a bit better.

[2boysmom]

"Houses aren't investments. It's going to depreciate, and it's probably going to cost far more than you may think."

 

 

 

I agree with almost all of these statements. Homes/land aren't going to depreciate except in very unusual economic times like the one we were just in. My house is still worth more now than when we bought it in 2003.

 

I do agree that homes aren't an investment but it is a good way to gain financial freedom if you are able to pay it off in a reasonable amount of time.

 

Good luck!

 

Elise in NC

 

 

Thanks Elise.

We are over 45 and making all kinds of decisions most people made long ago.

We are entering a new phase. Ugh! Thanks for the advice : )

[livetoread]

Something else to consider. If you get a mortgage, the banks set up your payments so that at first the vast majority of your payment goes towards interest, not principle. Then the ratio gradually shifts over the life of the loan.

 

So, for example, you might buy a house and make $1000/ month payments, but maybe only $100 of that would go towards equity in your house and the rest goes into the bank's pockets. The longer you are there, the greater the percent goes towards actually building equity. If you are planning on moving a few years after you buy, it will be almost the same as if you rented because most of your payment will have had no effect on your equity. You might have bought a house for $200,000, lived in it for 20 months making $1000/ month payments and end up still owing $197,500, not $180,000 like you would think. Take that plus the fact that you are financially responsible for all the upkeep versus renting, plus the realtor's 7-8% when you sell, plus the fact that in many parts of the country housing is still slow, and buying is not as attractive unless you are staying put for a good long time.

 

If you can pay cash instead of a mortgage, it gets more attractive financially. Of course, owning your own home can have other benefits besides financial. But I think often people get questionable information about the financial benefits of owning. A house has to appreciate quite a bit to make up for the interest you paid for the mortgage, the taxes, the upkeep, the realtors fee, inflation, etc. when you compare it to renting.

 

If the question is, "Is now a good time to buy versus other times?" I think the answer is a strong yes. Interest rates are quite low and so are prices. But if the question is, "Should I buy versus rent?" then things are more dicey, at least financially.

[elfgivas]

are you thinking of buying state-side, or where you are now?

will your kids go to college overseas or in the states? (huge cost difference)

 

i would wait until i knew where i was going to be five years from now before buying.

 

hth,

ann

[creekland]

Another question - how much does it cost to rent vs buy where you are? Around here, it is far cheaper (monthly) to have a mortgage than it is to rent the same house and mortgage interest is tax deductible, nothing on rent is. If that's the same near you, buying will tend to be a good investment IF you stay in the house more than a couple of years and it's in decent shape. If the rent is less than the mortgage, then finances can differ as you'll be putting more money into the house.

 

We own rental houses because they are a good investment. The rent more than covers the mortgage, insurance, taxes, and upkeep - there's no monthly cost out to us (on average) and the places are gradually being paid off so when we sell them (long term, not short), we'll gain more than we paid even if the price doesn't change. Our farm has also been a great investment, but we bought it before prices started to rise and were able to sub off a couple of parcels of land that we've sold for more than our original purchase price - plus we still own significant land with the main farm/house.

 

Whether housing is a good investment or not really depends upon your location and what you are buying.

[magnificent_baby]

In your situation, I would not. I would only do so if I were planning on staying somewhere long term.