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I recently decided that I wanted to refinance my house. It was an opportunity to lower my interest rate and consolidate some debt. Unfortunately, we accumulated some credit card debt due to medical expenses and the untimely passing of my mother. We plan for things financially, but sometimes more than one crisis will hit you at once. At that point, you do what you have to and sometimes that includes using credit cards.
I knew the value of my home had grown since we bought it 5 years ago, so I was delighted to see our appraisal came back at over $100,000 more than what we paid for it in 2014. We paid $205,000 in 2014 and it appraised for $314,000. I thought to myself, “wow, that’s over $100,000 that we made just from doing one simple thing… buying a house.”
If you own a home, this may not seem like rocket science to you, however, there are many people who don’t own homes for a variety of reasons. Some people prefer investing in the stock market to owning a home, citing unpredictable costs of repairs and an unstable market as the reasons. I have always been someone who has believed in real estate and historically, I know that real estate has always increased in value (as you can see in the chart below), so I would much rather be a homeowner and take advantage of that growth.
When Is the Best Time to Buy a House?
This may lead you to ask the question, “when is the right time to buy a house?” Given that over time real estate values have always ultimately increased, I would say that almost any time is a great time to buy. A few exceptions would be:
- If you know you will have to move within a few years because if the market drops – which it does from time to time – it may not recover by the time you have to move.
- The economy is in a recession or a depression (or clearly headed there). If this is the case, I would wait until the market has dropped to what seems to be the bottom (which is hard for even economists to predict). The reason this is a great time to buy is that you can ride the wave of market recovery which usually provides significant growth in value over a short timeframe.
Most people have to pay rent if they don’t own a home and to me, that is just throwing money away while making someone else (your landlord) wealthy. Think about it; a landlord makes money in at least two ways. First, they get to take advantage of the increases in value in the property and secondly, someone else is paying their mortgage.
If you have held off on buying a home for reasons of credit, you should know a few things:
- Your credit might not be as bad as you think. You won’t know until you have a professional advise you. When I owned my mortgage company, I specialized in helping people who had suffered credit challenges to become homeowners. They were often shocked to learn that they were in a better situation than they realized.
- Your credit won’t fix itself. You need to be proactive, and most of all, you need to have a plan.
If you need help with credit repair, feel free to contact me and I will share some of my credit repair resources with you.
What is My Home Worth?
Most people are not going to pay for an appraisal to find out what their home is worth, however, people often keep up with what homes are selling for in their neighborhood. While this can give you a ballpark price, you don’t always know how your house compares to what has sold unless you had seen the house. I do have a free tool where you can get a monthly update of your home value. It’s called Homebot and you can click here to get started for FREE. Homebot will give you an estimate of your homes value, however, there is never a substitute for having a real estate professional provide you with a Comparative Market Analysis (CMA). This is something I can help you with as well if you want to know exactly what your home is worth, which is critical if you are considering selling. If you have any questions about home value, feel free to reach out to me as I am a licensed real estate agent, with a national network of agents, so no matter where you live, chances are I have a professional contact there.
Don’t forget to sign up for Homebot to get your monthly home valuation update – It’s FREE!