Good Financial Reads: Your Biggest Housing Questions Answered

Deciding how much you can afford to spend on your dream home can be a challenge. For most of us, buying a home is the largest investment we make, and typically we borrow to pay for it, by taking on a mortgage. If the amount you spend on the home is too high, you may end up struggling to make the payments, and the financial strain could lead you to sell the home, potentially at a loss. There is also such a thing as underspending on the home. You may find yourself desiring upgrades down the road that are hard to make on the home you purchased. While the latter scenario is probably less worrisome than the former, having to sell your home and move elsewhere is quite costly.  So how do you size the home just right?

Beginning retirement with no debt might sound appealing. After all, you’re on a fixed income, and it’s not unlikely that you’ll go back to work and start earning an income in your final years of life (although some people work part-time during retirement to stay engaged and supplement other income sources).

So, does it make sense to use retirement funds to pay off a mortgage loan completely when you stop working? If your only debt is a home loan, it may feel satisfying to wipe the slate clean and simply pay living expenses and taxes.

One of the more remarkable things we’ve seen over the last 7 months of the COVID pandemic is the uninterrupted strength of the housing market. After a brief dip in March and April, home sales have been on fire. The question for prospective buyers/sellers of homes is whether now is a good time to buy/sell. What we do know: it’s a home seller’s market!

In February of 2019, my wife and I purchased our first condo here in San Diego, California. Getting started in real estate is equal parts exhilarating and daunting. I’ve helped dozens of clients go through the purchase process themselves, and am glad to have cut my teeth and gained the experience first hand.

Buying a home is typically one of the largest financial decisions we make, and a decision that is made infrequently.

Our clients live exciting lives that we like to live vicariously through.  We’ve had quite a few of you start the process of purchasing a home (or second home) this year!  Planning around a home purchase is a big part of our service offering for clients.  Questions that come to mind are… How much should our down payment be?  What’s the advantage of putting 5% down versus 10% down?  Does anyone put down 20% anymore?  Let’s dive in.

For decades, becoming a homeowner was synonymous with “making it” in America. At the end of the first quarter of 2020, US Homeownership rate rose to 65.3%, driven by increasing demand due to decreasing mortgage interest rates, as well as people spending a lot more time at home (and thinking hard about whether they enjoy their home). As people contemplate how they want to live during this pandemic, we thought this would be an opportune time to revisit a topic many of our clients are contemplating at this very moment: should we continue to rent? Or is now the time to buy a house?

One of the major surprises during 2020 has been the resiliency of the housing market. Despite the pandemic and the surge in unemployment that came with it, the housing market is as hot as it has been since 2005-2006. As we’ll see, all-time low mortgage rates are a key driver of this trend.