Top 3 Reasons to Delay Purchasing a Home

By: Nef Cortez

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

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

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.
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