Buying a Home? Ask Yourself These Questions First

buying a homeAs the housing market continues to take a beating -- new data out this week shows home prices continuing to fall in nearly every major metro area -- homebuyers need to evaluate their decisions more carefully than ever. In such a soft market, you may be stuck with your choice for a long time, and mistakes can be more costly than ever. Our sister site DailyFinance offers some help for homebuyers in the form of three essential questions you need to ask before making a decision.

It's a brave new world in the U.S. housing market -- one in which many of the old familiar norms have come into question.

To say that the current housing market is likely to punish those who don't painstakingly evaluate their decision to buy a home would be an understatement. In most parts of the country, there's no strong tailwind of buyer demand to provide a safety net against home purchase mistakes. With all that in mind, here are three questions that prospective homebuyers would be wise to incorporate into their evaluation process.
1. Are you prepared to own the house for five to seven years?

The housing bubble is long since gone, and with it, the old idea that you could count on a 5% to 10% average annual appreciation in your home's value. Today, that only applies in a few high-demand niche markets. That means if you have to move again in a few years, you're probably going to pay a high transaction cost. Between the costs of selling, and the possibility of a decline in value of your home, or a minimal increase, you may end up netting less money than your outstanding mortgage principal.

Read the full story at DailyFinance.

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