The housing market is very different than it was before the foreclosure crisis. The New York Times provided some guidance from economists and financial planners when contemplating a home purchase. Here are the highlights:
- Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
- Don’t become overconfident about income growth. It is important to act sensibly when borrowing.
- Anyone contemplating adding children to the family should calculate whether they could live on one income. Having both halves of a couple work may turn out to be impractical.
- Include a maintenance budget. Even new homes need upkeep and repairs.
- Buyers who can’t afford their dream home now should opt for a starter home where they can save money each month for what they really want.
- Consider a property that can be expanded and improved down the road when money is available.
- Make sure you're confident with the loan, no matter the size of the mortgage.
Source: The New York Times, Ron Lieber.