Market Timing or Long Term Planning? How To Buy Your Next House In This Market

Life has been interesting being a mortgage professional in the past 12 months. Most people I run into seem to have the same curious question: “how are you doing? How’s business?” Maybe secretly, deep down inside, they were expecting to hear me crying and spilling out horror stories about how the sky is falling - just like the rest of the reporters you hear in the media. But the truth is “It’s not that bad”. Actually, I should qualify it by saying “It’s not that bad for people who can truly afford to buy”.

The credit crisis has certainly changed the landscape of the lending industry, but for the better! While it may be more difficult to get a loan these days, it’s becoming an easier market for buyers who are financially positioned to buy. For one, people with 20% down payment don’t have to compete with other buyers with no money down. The economic downturn that we are experiencing right now truly underscores one thing that we believe to be the core of what makes people successful – Planning!

Looking for that perfect house (one that fits your commute requirements, the right school district for your kids, long term appreciation concerns, and maintenance issues, etc) is one thing, but how does such a purchase fit into your overall long term financial planning is another. Culturally, we have not been trained to think that way. For example, for a younger couple who may have had a couple of kids and progressed through their careers, at some point, they get “the hunch” that they can/need/should move up to a larger home. So, the buying process is generally around finding a house that meets their logistical needs. But, what about the financial needs? With increased income, they can probably qualify for more now. But as I always tell my clients, Qualification is different from Affordability – there is a big difference. For most people, signing up for a bigger mortgage payment often means needing to cut back on something else. It is a perfectly fine thing to do, as long as that honest conversation is taking place, and a specific plan is put into place.

Because I often get asked the same kinds of questions from different buyers and the lending guidelines constantly changing, I thought it’s time to do another seminar to specifically address the important questions that home buyers should be asking, especially in this market. It’s on Thur Oct 16th, at 6:45pm at my office in Palo Alto. If anyone is interested, feel free to contact me at blogposts@yulinlee.com or 650-799-8768.