If you can wait it out, you’re likely to spend less for a new house.
- The combination of rising interest rates and high home prices make purchasing a home far more expensive than it was this time last year.
- Until all your ducks are in a row, buying a home now can lead to financial distress.
Michelle Singletary has written the nationally syndicated column “The Color of Money” for more than 25 years. After spending a quarter of a century writing about personal finances, Singletary knows a thing or two about financial stability. Here’s why Singletary says now is a bad time to buy a home:
High home prices and rising interest rates create an (im)perfect storm
Rising interest rates combined with sky-high housing prices make today the wrong time to take on a mortgage. If you’re currently in a home that’s too small, Singletary suggests finding a way to make it work until the housing market improves for buyers. Let the kids share a room, or take the dog for a walk if you don’t have a yard. In other words, compromise until the ball is back in the buyer’s court.
For those of us who crave instant gratification, that piece of advice can be hard to swallow, but not as difficult as Singletary’s next suggestion.
Singletary says that moving in with a parent, sibling, or someone else you’re close to is a great way to get your finances in order. In fact, she says she’s a huge believer in shared housing and multigenerational living situations.
Singletary says, “If you’re just out of college and living with parents, stay, stay, stay until rents and housing prices stabilize.”
The finance guru admits that people hate when she makes this suggestion. Still, it can work.
An emergency account is essential
Although Singletary and her husband both work, she says she’s always planning for the next pandemic, job loss, or other emergency. If you don’t have enough put away to carry you through a period of unemployment, you’re not ready to purchase a home.
How much you need in an emergency account varies, but a good rule of thumb is to have enough put away to pay six months’ worth of bills. If you’re a worrier, you may want more.</…….