In a recent article titled “Buying a First Home Costs More Than You Think, Especially Now”, The Wall Street Journal described the perils of buying a home in today’s market. With interest rates rising, it can be a risky time to buy a home—and many buyers are making it even more risky buy doing things like stretching their budgets to the max and waiving inspections to get into a house. LDSAgents.com suggests that it’s time to slow down the process and think about what you are getting yourself into.
First, living on the edge financially to get into a house can be fraught with danger when you have to sell. As experienced home owners know, rising interest rates generally result in declining home values. People can only afford so much in monthly payments, and rising rates means that monthly payments for a given house must go up. When that happens, home prices must go down.
Lower home values are nothing new. It happened the last time around in 2008 when millions of people found themselves “upside down” in their homes because they were suddenly worth less than they paid for them. It was a nightmare and you can avoid that scenario by not jumping in too quickly when the economy is so uncertain.
Second, waiving home inspections just because the seller demands it can really bite you in the long run. The Journal gave several examples. In one case, “the seller had two conditions: waive the inspection and promise to go through with the deal even if the property was appraised below the purchase price.” The buyers agreed. On the sweltering summer day they moved in, the air conditioning system went completely out and they had to immediately spend $7000.00 to replace it.
In another case, the sellers gave a couple only 15 minutes to walk through a home before deciding to make an offer. They had an inspection—only to find out after moving in that the inspector missed the fact that most of the windows in the home did not go up and down. They were shocked to receive quotes of roughly $50,000.00 to repair them.
We are living in emotional times and home buyers who let emotions do their bidding often find themselves holding the bag down the road. Right now is a good time to slow down and watch to see how interest rates are affecting the price of homes. Up to now, it has definitely been a “seller’s market.” But don’t let aggressive sellers or your own emotions rush you into bad decisions about inspections or finances. Things could be changing soon in favor of the buyer.
Learn more at LDSAgents.com!