This is the second part of my “Is it the right time to buy a home?” series where I am posing four questions for first-time home buyers.  Today we are examining the question, should you stay where you are?  To see the full series visit my personal website, www.jalone.com, or click here.

Should you stay where you are?  First understand that buying a home is not an inexpensive process.  Most buyers only consider the price of the home but don’t forget closing costs which include such items as origination fees from your lender (this is the point or points many lenders charge to make the loan), other lender fees such as processing and underwriting costs, credit report, appraisal, title insurance, recording fees, courier fees, notary charges, endorsement fees, title closing fees, title document preparation fees and other fees.  According to the Yahoo mortgage calculator for a fixed rate 30-year loan of $220,000 with a 1 point origination fee, the estimated closing costs would be $4,355 and the calculated Annual Percentage Rate (APR) for the loan would be 6.689%.  This loan would have monthly principal and interest payments of $1,390.55.  That same loan at 7 percent would have the same closing costs but the monthly payment would increase to $1.463.67.  In this example the closing costs were only 2 percent of the loan amount but many mortgage experts tell us to plan on paying anywhere for 3 to 5 percent of the loan amount in closing costs.

Another thing to consider when making a home purchase is how long will you stay in the house?  From a historical perspective the answer has been you want to stay in the home at least as long as it takes you to recover your closing costs through appreciation.  During the early 2000’s this may have been measured in weeks.  In today’s market I am telling buyers they should consider staying in the home from 5 to 7-years.

With this in mind consider your life plans, getting married, having a baby, going back to school, switching jobs or careers.  Is there a parent who if they became ill or died would change your plans?  These are important considerations before falling in love with that great house in Old Roseville that has your name on it.

This was part two of my five part “Is it the right time to buy a home?” series.    Visit my personal website, www.jalone.com or click here if you want to read the entire series where we consider:

 Is it the right time to buy a home?

 Should you stay where you are?

 Are you financially prepared to be a homeowner?

 How much can you pay for a home?

 Do you know what you want in a home?

Julie Jalone is an experienced Realtor with MagnumOne Realty in Roseville and she and her team work with buyers and sellers of homes in the greater Sacramento area.  To learn more about Julie and her business visit her personal website at jalone.com or check out her daily blog, “Keep it real in Sacramento.”