To Buy or not to buy
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Experts Counsel HomeBuyers to Consider Circumstances

RICHMOND, Va. (April 16, 2003) - The housing industry continues to bolster our nation’s sluggish economy as near record low interest rates continue to fuel home sales, according to the latest reports from the National Association of REALTORS®.

When as little as a 1-percent change in interest rates can be the difference between qualifying for a home loan and being rejected, consumers are eager to take advantage of low prices and affordable mortgages.

But despite the appeal of low interest rates and affordable prices, experts warn against making a hasty decision to buy a home.

“Yes, current economic conditions might make home buying more affordable for some people right now, but that doesn’t necessarily mean it’s the right choice for them,” says Anne Gwaltney, manager of VHDA’s Homeownership Education Program. “It’s important to be educated about the entire home-buying process and the long-term implications of owning a home and to think about how those factors fit your goals, lifestyle and current finances.”

Many potential buyers are attracted to the stability of homeownership costs - the principal and interest payments are fixed on most mortgage loans for the term of the loan - but those stable costs are typically higher for renters-turned-homeowners. Gwaltney advises that preparing for the added expense of a mortgage - plus the regular costs of home improvement, maintenance, insurance and property taxes - is one of the most important things potential buyers can do.

“Homeownership costs more than renting. Homebuyers should be confident they can handle this large financial obligation before they begin looking for a home,” said Gwaltney. “Otherwise, it’s very easy to run the risk of losing your credit rating or worse - defaulting on your loan.”

Despite all the added expenses, homeownership can and does benefit owners. Buying a home can prove to be one of the soundest investments of a lifetime. It can be likened to a scheduled savings plan. Monthly payments reduce the mortgage loan balance, and allow homeowners to build equity - the difference between the value of a home and the amount owed on the loan. If properly maintained, the home’s value typically will increase. As the home value increases, the homeowner’s equity increases.

Tax benefits are another advantage of homeownership. Mortgage interest and real estate taxes are deductible and usually can reduce the amount of income tax homeowners pay.

Homeownership also affects quality of life. Before purchasing a home, you and your family should consider if you are ready to settle down and become part of a community. Homeownership allows families to get involved in the community and make a difference in their neighborhoods, but it also restricts mobility. Owning a home makes relocating more difficult because moving requires more than simply giving notice and leaving. Until you sell your home, you will remain responsible for mortgage payments and maintenance.

“When you buy a home you should be prepared to stay there for a minimum of three to five years before attempting to sell or move so that you can build up enough equity in your home in order to sell without losing money,” Gwaltney advises.

“The responsibilities of owning a home are numerous. It’s a lot to think about,” she continued. “But it’s better to be educated about these things before your first monthly mortgage bill arrives in the mail.”

To learn more about homeownership or VHDA’s free statewide Homeownership Education Program, call 1-888-643-2696 or visit www.vhda.com/edu.

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