I work with a lot of first-time buyers, who, sometimes with a little trepidation, make that step and then look back and ask themselves why they waited so long. In just a few years, they have paid down their mortgage and will see their property appreciate. Each year, they see their net grow and grow.
I also know many others that are thinking of buying but never make it happen. Meanwhile, they continue to pay their landlord's mortgage and fail to build up any real wealth.
I have heard just about every reason why people don't buy, some are good reasons and some are lame rationalizations. Here are the most common ones I have heard.
- I don't know how long I will be in the area.
This is probably the one I hear most. DC is a very transient city and people come and go from this area all the time. When I first moved out here after college, I didn't have any long-range plans. Twenty-five years later, I'm still here.
For some people, this is a legit reason. If you know you won't be here for more than two years, financially, it is probably better not to buy. If you are here on a definite short-term work assignment or school or military deployment, then hold off.
For the majority of people that tell me they don't know how long they will be in the area, five years later, they are still here. And in that five years, they paid $120,000 in rent (using an average of $2,000 a month) and have nothing to show for it. Meanwhile, if they had bought, they could have built $25,000-$50,000 in equity. That's real money to a lot of people.
This is a legit concern but how do you know you can't afford it? For many people in this area, you can buy a place for roughly the same amount you pay in rent each month. In addition, there are many different loan programs tailored for first-time buyers. You might be surprised what you can afford. A call to a good loan officer can answer most of your affordability questions. If you need a few recommended lenders, let me know.
- I don't have the down payment.
This is similar to the 'I can't afford it'. Many buyers have the misconception you need 20% down to get a mortgage, but that is simply not true. There are many different loan programs and even some sources of down payment assistance depending on your income level - and in this area, the threshold is quite high.