Myth # 1: Interest rates are going up. I should buy later.
Truth: While interest rates have increased in the recent past, they're still at
historically low levels. Consider buying now to lock in a low rate; if interest
rates decrease thereafter, you can always look at refinancing to get a better
rate. Just make sure to obtain a mortgage with no pre-payment penalties.
Myth # 2: There are lots of homes available. I can wait and see.
Truth: Many pre-owned homes you see listed will never sell. Most homeowners
don't have to sell unless they have moved out of the area, or
defaulted on their mortgage. As for new construction, many planned for-sale
communities will simply be put "on hold" or converted to rentals until prices
return to a point that justifies the cost to build or sell them.
Myth # 3: Renting gives me the freedom to come and go as I please.
Truth: Renting can lend you some near-term freedom, but owning usually provides
greater financial freedom in the long run. Rental rates typically increase, and
the payments you make are gone for good – with no equity built, and no
available deductions to lower your taxes. Plus, every rent check you write
means less money to put toward buying. Buying a home is an investment in your
future.
Myth # 4: If I buy and my home's value declines, I'm in trouble.
Truth: Regardless of how the overall housing market performs, if you've
selected a fixed interest rate on your mortgage, you know exactly what your
payment will be–no unpleasant surprises. If you're looking only at the short
term, for instance moving in next 6-12 months, it makes more sense to rent.
However, if you can stay put for a little while, buying can be much more
compelling.
Myth # 5: The housing market will continue to decline.
Truth: California's land constraints, along with its popularity as a great
place to live suggest that the housing market here will remain strong in
the long term. It's simple supply and demand at work. Homeowners here know this
and will resist the urge to sell in the face of minor fluctuations.
