Why to plan for the long term when buying a home

Getting your piece of the American dream, buying a home, it’s one of the pivotal moments in life. It can for many families be bedrock by which future happy family memories are made…

Real estate is a buy and hold game and interest rates should have no bearing on your long-term financial plans for owning real estate for the primary home. You cannot time interest rates, you cannot time the market, and there is no way to accurately pinpoint and identify the best time to buy a house. It is literally impossible-what you can do, however, is pragmatically do your best to have as much down payment as you can, the best credit score you possibly can, the lowest payments, the best income or having a healthy balance of these important elements.

Here is an example back in 2008 interest rates were 5.5- to 6.0 on the average 30-year fixed rate mortgage. There was doom and gloom, people were being laid off from their jobs, we had just gotten through the fiscal crisis, and there was significant financial pain. About 60% of the people back then wanted nothing to do with buying a home. However, the other 40% of those people who bought a home did extremely well with a fixed rate mortgage on a long-term strategy. If those people who bought a house in 2008 still held real estate today their house would’ve gone up several hundred thousand dollars in value if not more most likely. It’s reasonable in Santa Rosa, California you could bought a house for $250,000 and today it’s now worth $675,000. That’s an example market forces at work measured over time.

The belief of “I don’t want to buy a house because I don’t like where interest rates are and I don’t like the payment that’s one thing” if you truly can’t afford it, genuinely can’t afford it that’s something else entirely, but the majority of people who can afford the home and have a long-term approach in mind absolutely should jump in with both feet as long as they can afford the payment they’re feeling good about their job and they plan to be in that house for 5-7 years or longer.

Here’s why over the course of time, not only will let there be multiple refinance opportunities probably at least 2 to 3 refinance opportunities inside the next five years, but they will also experience long-term home appreciation not to mention wealth, creation by virtue of increased home equity, which is a driver of net worth all, while at the same time, being able to write off all of their interest and all of their property taxes.

So if you have a long-term plan in place, you have a good job good income and you’re feeling optimistic about your budget and your ability to maintain a mortgage payment in the future.

What happens when things change?

  • What if you get relocated across the country and you must sell the house?
  • Can you rent the house?
  • Can you keep as a second home?

Lets say for example you change jobs, you indeed could rent the house out for a year or two, and then sell the house down the line and the tax the taxable gain that you would’ve got from the sale of this house  can be rolled into the acquisition of another rental property. The point is with real estate you have options you can sell, you can refinance. You can rent the house out and with today’s environment you might even be able to Airbnb the home, depending on where the house is located and what the revenue supports.

It starts with talking to a quality lender and providing them with the application and the paystubs, the bank statements and everything they need. You don’t want the lender just to say here’s what you qualify for today. Every lender can do that and that’s a basic prerequisite, what you want is a lender to say what you qualify for today what you’ll qualify for when interest rates change in the future and how that specifically relates to your monthly budget. This extra step is the icing on the cake the and 80% of lenders don’t do it.

Start today by getting a comprehensive mortgage plan.


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