I say this not because of the market correction, but because many really need to prepare for a serious purchase. A few things buyers will need to do:
- With mortgage companies now requiring larger down payments, first time home buyers will need to start putting aside money years ahead of time. When we bought our first home, we had saved a enough for a 10% down payment. Buyers should have at least this much real equity into the home when they move in , as a "safety" cushion.
- Credit FICO scores are now even more important. Buyers will need to spend the next few years correcting everything they can to improve their score. Get as close to 700 and above as you can.
- Think seriously about where they want to live. With ever increasing prices for gas and food, buyers should think about the cost to commute to work, and pick an area to live that will have less impact on the pocket book in regards to the current cost of living in the Twin Cities. Unfortunately, incomes have not kept pace with rising costs and spending extra money on gas and goods could effect your overall ability to afford a home.
While the urge to achieve the American dream of home ownership is very real, buyers need to be realistic about their ability to purchase. Yes, there are tons of deals out there via builders and foreclosure, but only those that can afford them should be the ones buying.
Some took offense to the first post about the subject, saying I had no business saying that now is a great time to buy. Later this week I will further the discussion by again saying why now is a great time to buy and for whom.