Making the Most of a Home Buyer's Market

July 11, 2007

The housing market is cyclical--home prices go up, they come down (a little), and go up again; generally, however, appreciation in homes rises over time and our houses are usually one of our best investments. We are currently in a home buyer's market. Between rising mortgage foreclosures and flat, or falling, home prices, there is in many locations an excess of home sellers over home buyers. Mortgage rates are still attractive and now might be the perfect time to buy a second home. If you are considering a home as an investment, here's what you should be thinking of.First of all, are you interested in staying in your current home or are you ready for a new one? If your current home mortgage is low enough to gain a positive cash flow from renting it, you may consider doing just that. Even if you are out of pocket on a monthly basis, you probably can make up the negative monthly cash flow at tax time with home mortgage interest deductions and depreciation.

If your current home is where you want to live, can you use your primary home for buying a second home? Homeowners who love their houses may wish to continue to live in their primary residences but access their home's equity to purchase another property as a second home or as an investment. By doing a cash-out refinance of your existing home, a home equity line of credit, or a home equity loan, many homeowners access their home's equity to finance new properties.

Over time, our homes offer us a great savings plan by developing equity while allowing great yearly tax benefits. Talk to your financial advisor or trusted lender today to see if today's housing market might be of benefit to your family's future well-being.

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