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Is the Timing Right? When to Buy a Home

Both personal factors and larger economic forces must be taken into account before you buy a home, whether as an investment or as your primary residence. Some of these elements, such as the housing market, the economy and interest rates, are out of your control, while others relate to your own personal financial picture and long-term goals. Devote some time researching the state of the market and reflecting on your financial goals in order to define your parameters and form a sound strategy before purchasing your next home.

Evaluating the Market

The Right Time to Buy a Home

The real estate market generally moves in cycles over a period of several years. The single-family home market responds readily to economic forces, such as the historical level of interest rates and taxes. Since most buyers purchase a home with a loan, lower interest rates provide borrowers with lower mortgage payments and make buying a home cheaper and more attractive. Similarly, a favorable tax climate stimulates the housing market by allowing homeowners to retain more equity in their homes. This is especially important for investors--a relatively low capital gains tax rate of 15 percent has fueled a surge in real estate investment activity in recent years. The advent of 1031 exchanges has also created new opportunities for homebuyers.

Timing is also a crucial factor in ensuring that your home builds equity quickly. As people move into a neighborhood and local demand increases, property values go up and your home can sell for significantly more than what you paid for it. In some neighborhoods, equity appreciation can reach rates of 15 to 20 percent. If you time it right and invest in an up-and-coming area that becomes trendy, you can then refinance your mortgage and pull out all your equity. Be prepared to pay more in property taxes, however, since your assessed value increases along with your equity.

Assessing Your Unique Position

No matter what the economic situation, personal issues must also be considered. How secure is your employment? Are you planning on adding members to your family? Are there any predictable medical issues to be faced, and are you prepared to handle the unpredictable? Buying a home will probably be the most expensive purchase of your entire life, and needs to be approached very carefully. The consequences of inadequate preparation and research have been borne out in the subprime mortgage meltdown currently affecting the housing market throughout the US. However, if you're in a position to do so, these events have created one of the most opportune times in recent history to buy a home. With foreclosures and loan defaults affecting almost every corner of the country, buyers have a wide selection of homes to choose from, and can easily negotiate a lower price. Nevertheless, make sure that you perform a comprehensive analysis of your cash flow, both current and projected, to be confident that you can make your mortgage payments according to the type of loan you've secured.

For more information on buying a home in Tampa Bay, please contact at your earliest convenience. We've been serving the Tampa Bay community for many years, and we're eager to help you find the perfect home.