The Federal Reserve has pledged two years of low interest rates.




But what if Obama isn’t reelected, what if Bernanke leaves?  Although, one would think policy could change, I believe it is a safe assumption that interest rates will remain artificially low (at least) until the presidential election.   Potential home buyers take note; if interest rates won’t increase in the near future, there is no rush to purchase a home. 

Without the rampant home appreciation we have come to expect, homeowners should plan on living in their homes longer, a lot longer.  This means home buyers need to very carefully plan for their future.  When school district is a priority, do not buy today and believe you can just pack up and move in five years to a more desirable district.  Maybe you can and maybe you can’t.

Purchase a home for the future.  What size will your family be tomorrow?  Several years ago, I showed a single man homes.  I advised that he purchase as much home as he could afford, but he was adamant about buying a more modest home (small) and we parted ways.  He recently contacted me and told me he made a mistake.  He married shortly after buying the home and soon had twins.  He doesn’t have enough equity in his home for a down payment on a larger one and his family of four is stuck in this lovely but tiny home. 

I suggested that he rent his present residence and then his family could rent a larger home.  But he is thinking of selling his tiny home and buying a condo…. And yes, once his children are a couple of years older, he will be back in the same boat (because he is shortsighted).

Purchase as much home as you can comfortably afford.  The first couple of years may be a struggle; there may not be a lot of vacations and dinners out.  But you will grow into the payment.  If you don’t purchase as much home as you can afford you will soon outgrow your home and could be stuck.

The good news for potential home buyers is that if you don’t yet have a down payment, you can step up your saving efforts.  Drive a more modest car, dine out just once a month, live in an affordable apartment or if single live at home.  And for the ladies, stop with the expensive handbags (I recently cleaned out my closet and was disgusted).  Perhaps you can supplement your income with a part time job or overtime.  

Potential buyers have a window of opportunity, go for it, it could be your last chance for home ownership.

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Ten steps to prepare for homeownership
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How long should a buyer expect to remain in their home? 
Why it pays to deal with a real estate pro