Buying A House – Is It A Good Investment?

A carefully selected house financed with a mortgage can do three things for you. It can help you accumulate money and create a forced savings plan. A house can profit you over the years if you happen to own it during a period of economic growth, shortages or inflation. It is one of the few investments that can be used as well as held.

For most people, buying a house represents the largest financial commitment they will ever make. For this reason, every detail of the transaction is important.

The house should be affordable, sound, attractive, usable and marketable – it needs to have “good bones.”

Mortgages often run for 30 years so every fraction of a percentage point in the interest rate can translate into thousands of dollars lost or saved.

The monthly house payment should not be so large as to be make the purchase a risky one or so small that the increased term of the mortgage piles up more interest charges.

The price, although sometimes brushed off as not that important when compared to the amount of the monthly payment, but it is obviously very important. Overpaying could result in a substantial loss. This is obvious when you see how many people are “under water” with their home in the current economic down turn.

Here are three questions to ask yourself before buying a house:

• Is the house attractive and a good buy at the price?
• Can I afford to buy it under the financial terms offered?
• Will I save money by buying instead of renting?

Choosing a good neighborhood is probably the first step in choosing a house. Naturally you will consider availability of shopping facilities, schools, churches and transportation. But there are other things to consider.

Suburban and rural areas attract many. They provide that “spacious living” out with the trees and bees. They also present their problems.

Cost of transportation is another item that can eat into the savings you make by living in the suburbs. You may have a long commute to work and pay to park it every day. That soon runs into money.

When buying a home make sure it fits in your budget, try to keep your monthly payment around 25% of your take home pay. Also as many have discovered in these troubling economic times… when two incomes are required to make the monthly payment a job loss can seriously hurt your financial position.