For people who are planning to sell real estate properties and their homes, it is a known and grudgingly accepted fact that in today’s downtrodden economy, this is the worst time to sell a house.

So how about for those who would like to buy a house? Is right now the best time?

Well, because of the depressed economy, some potential buyers may actually be scared to go ahead and purchase a house. They have good reason to be concerned about purchasing a home in this economy. Many people believe that the real estate market is still on the way down with prices still plummeting.  These truth tellers will also tell you that it is not a good time and it is actually a terrible idea to enter the market right now.

However, if there are certain factors that are in your favor, it may be a good time to purchase a property. Today’s historically low interest rates and decreased property values are two major factors that are attracting new home buyers. Who wouldn’t want to buy a home for 200k that was worth over 500k just a few years ago. But what if that same home is worth $100,000 in the next couple years?

If the decision to buy a home was just based on hard to find experts and the economy, then we wouldn’t see too many people in the market right now. But the reality is that many home buyers make an emotional decision or buying decisions based on what they hear from their local Realtor or news anchor. These consumers are going to do whatever they choose to do. Hopefully this is not you and the reason you stumbled upon our blog is because you want to get educated and you want to make the best decision for your future.

I’m not sure if you’re one of these people or if you’re looking for the best advice out there. But here on LoanSafe.org we’re going to give you the truth and we feel that now is not a good time to buy a home. The market is still on a way down with much more to go.  Millions of people are losing their homes to foreclosure and millions more to come. This means that property values will continue to plummet and if you purchase a property in this market, most likely that home will be worth a lot less this time next year.

We have met many people here on LoanSafe.org that have bought a home in the last few years. Most all of them have regretted it because they either lost most all their value, are underwater or they have lost their jobs in this sour economy. Do you wanna be one of these people?

It may be wise to wait a couple of years to see how the market plays out. There’s nothing wrong with renting now as you watch real estate values. The best time to buy a home is when the market is flattened out and it is on the S curve on the way up.  This may take 2 to 5 years to happen. It will definitely not happen this year or in 2011. You just need to be patient because this is a huge financial decision and commitment.

Here is some more information to help you in your decision. Whether you decide to do it now or later, that choice is up to you. At least we did our job and warned you of the possible implications.

There are four things that you ought to have if you want to buy a house.

  1. Determine how much your monthly payments will be and how much you can truly afford. A good rule of thumb is you want your monthly payments to be at or under thirty percent of your total monthly income. This should allow you some extra breathing room for other debts or maybe even unexpected emergencies. If the payment is going to be above this amount or you do not have a surplus after all your expenses are calculated including the mortgage, you may be better off renting for a while.
  2. How many debts do you currently have? If you have a couple personal loans, car loans, or multiple credit cards, you may want to work on eliminating some of these debts before applying for a home loan. Remember this is going to be the biggest investment of ones life so please take your time to carefully think about whether or not you can keep up on all your obligations.
  3. Do you have a great credit score that will enable you to secure a low interest rate? The higher the credit score the stronger your creditworthiness will be, and this will help make you eligible for the best rate possible. These days lenders have tightened up their lending requirements so it is crucial a prospective buyer has an impeccable credit rating.
  4. How many years are you planning on residing in the home? Generally, the longer you are considering living in the home, the more it makes sense to make a purchase rather than rent.This will allow you to obtain equity over the years and there’s a good chance the home’s value may raise as well.

Please keep in mind that the housing market is not stable and home values may continue to decrease over the next couple of years. This is something we won’t know until the time comes. So make sure that you really take the time to think about whether or not this is a good investment and if you can truly afford to live in the property.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.