So you have set aside enough funds for a down payment on a house and

closing costs? And you are curious to know if there is ever a time when you

shouldn¡¯t buy? Regardless of all the benefits of buying a home, it is still a major

and life changing purchase and a buyer should go forward with an cautiously

optimistic but informed attitude.

An important thing to honestly evaluate before you purchase is the average

appreciation rates of your local market and your own personal circumstances.

Historically, the average appreciation rate for real property has been roughly

6%; however, as the nation is huge your local market appreciation rates can

obviously vary. Your main objective should be to stay in your house long

enough so that you are not placed in a position where you will have to sell your

home at a loss. If you have to sell a home before it has appreciated enough to

cover the costs and commissions of selling, you could find yourself in a

serious, financial bind. This especially applies to those who buy a home with a

down payment of ten percent or less. In the market of the past five years,

many who purchased homes with zero down payments are finding themselves in

exactly that position, basically ¡°under¡± their loan.

Real estate commissions traditionally run around six percent of a home¡¯s sales

price. The seller¡¯s closing costs generally amounts to about one and a half

percent. Adding all the costs you would incur if you were forced to sell, you

can see how this can easily exceed the first year¡¯s appreciation of your home. If

you made a minimal down payment (from 3% – 5%), you could actually have to

come up with cash out of pocket to sell your home. In addition, if the value of

the houses in your neighborhood has dropped considerably, you may also find

yourself owing a deficiency judgment. A deficiency judgment is a judgment for

an amount not covered by the value of the security( in this case your house) put

up for a loan or installment payments. In general, with the final sale of the

house, the owner is still left with a balance owing on the original amount of the

loan and is liable by law to pay it. While this is the worst case scenario, it still is

prudent to know that such situations can occur and realistically evaluate how

you can avoid them.

The three occasions when it is much better to hold off on buying a home are the

following:

New to the Area

A very good to reason to delay buying a home is if you have just moved to an

unfamiliar area or region of the country. It makes sense to rent for a number of

months before deciding on exactly which neighborhood you desire and can

afford to live in. Often when people are too hasty to buy a home immediately,

they find that they might have made a better decision if they had waited awhile

and had become more familiar with the surrounding neighborhood and local

community. They would have additional leisure time to evaluate home values

and find the best bargain in the neighborhood they desired to live in.

Uncertain or Unstable Job Future

You could have just graduated from college or you are expecting a promotion

and a transfer. Or perhaps, your company has announced an impending

“restructuring¡± or ¡°downsizing¡±. If any of these apply to your situation, it might

be best to forego buying a home until your job and financial situation stabilizes.

It is much easier to dissolve a lease on an apartment or condo, than to try to sell

a home in a financially difficult or pressing situation.

Marital Problems

While not advertised on national real estate ads, real estate agents are often

participants in the real unfolding life drama of clients who have to sell their

houses due to foreclosure, divorce, and deaths in the family. One of the

saddest scenarios occurs when recent former clients undergo a divorce and are

forced to sell a recently purchased house. For whatever reason, many couples

in marital turmoil, are steeped in denial and often decide that buying a new

home may help resolve their difficulties. Perhaps it is inevitable that such

problems should then occur, but selling a home before it appreciates can create

an additional emotionally draining financial burden in an already difficult

situation.

While this certainly isn¡¯t meant to discourage the prospective buyer, it certainly

is intended to inform the buyer of the serious decision they are about to

undertake and to evaluate his or her circumstances honestly. Taking the time to

be forthright at the outset will assure a purchase they will be happy with in the

long run.

For more information visit http://www.nefcortez.com