Real Estate Buying/Sellling Question

Anonymous · ‎08-12-2007

Hi - Right now with it being a "buyer's market" is it wise to try & buy a larger home? Right now my equity is probably zero - builders here are offering a lot of incentives. One builder showed me today that their prices went down $40,000 since this past Spring. I have been tempted to try a guaranteed buyout - but would still end up without any beginning equity. The cost of the "new" house if I built would be approx. $70-100,000 more. Is it better just to stay put now until we would build some equity - or gamble that if we bought a larger home prices would eventually rise? I am figuring the home we would buy more than likely we would be there "forever". If wte stay in our present home, even tho' it is only 3 years old - it was a builder's spec home and I would plan on adding new floors (maybe hardwood) and redoing the kitchen cabinets.

Thanks - Lynn

Anonymous · ‎08-12-2007

I am assuming you currently own a home that you purchased with 100% financing. If you currently have no equity, consider:

You said it yourself, it's a buyers market. How long do you expect your home to be on the market before it sells. What type of price concessions will you have to make to get it sold?
Closing costs. If you are able to get full price, that pays back your loans, but you still have to come up with money for closing costs.

If you are truly looking for a home to retire in (not speculating) and you can get out of your current housing obligation, then ask yourself "Can we comfortably afford the new payment?" If something were to happen and you lost your income for 3 or 4 months, how would you make your payments?

100% financing is scary. But stretching your limits to buy a bigger home and using 100% is very scary.

Anonymous · ‎08-12-2007

Thanks for the reality check. I appreciate your honesty. There have been so many incentives recently, sometimes it sounded "too good to be true". I think we will just stay here and I'll redo my floors and kitchen. For those projects I will pay cash for.

Thanks - Lynn