New homebuyers: out on a limb or safe at home?

By jkutner, 18 May, 2009, No Comment

Not long ago new homeowners could afford to stretch the budget, assuming that appreciation would pay them back for buying a property that was a bit beyond their means. In 2010, however, reality dictates that, since appreciation is not automatic, buyers get more realistic and match their reach to their grasp. Mortgage payments at a quarter your monthly income are a lot safer than at one third of your income. And, since home ownership is still the best investment around for young couples — values rarely decline for very long and the tax benefits of ownership exist independent of the market — even a manageable investment can provide a spring board to a larger home in the near future. (Historically, most mortgages are paid off within seven years.) So, slow and steady is the new mantra — reach for what you can hold onto now and let value appreciation come at its own pace.

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