What’s the 5-Year Rule in home searching?

It seems that, in the world of Northeast PA real estate, the tides could once again be turning around from renting a home to home ownership. And, I think we can probably thank lower home prices and mortgage rates that are at an all time low for the shift.

And, if you’re considering searching for your next Northeast PA home and are doing your own “what’s my monthly rent vs. a mortgage payment minus the tax savings gonna be” calculation, many financial advisors recommend that you consider this rule of thumb as well…. you should plan to stay in your new home for at least five years.

 While these transaction costs are only one consideration that makes this a good idea, here are some of the others reasons why it’s prudent to think about the 5-year planning horizon as you conduct your home search:

I’d like a little financial security!. Every homeowner knows they need to have some extra funds set aside for an emergency just in case there is some unforeseen loss of income. Affording a home and its maintenance costs should never jeopardize the financial health of your household.  Liz Weston of MSN.com recently asked several experts for their calculations regarding home repairs. Their answer? Plan to spend at least an additional 1% of a homes’ value on maintenance each year.

What about the resale value? – There’s still a significant amount of “distressed homes” and the trend  will likely continue to exert at least some pressure on home values for the near future. If you need to sell your home two or three years down the road, you may come up short when all the moving, transaction, and other expenses are considered and it may be at least that long before the familiar growth in residential real estate value resumes.

How about my own sanity! – Studies have shown that moving is one of the top stresses in life (up there with death, divorce and illness). Personally, I think a well-planned move is a little less dire, but it is true that a happy homeowner is a settled homeowner.  When you’re starting your home search, consider the changes coming to your family in the coming years: New baby?  Child to college?  If you know a move is eminent in the near future, consider finding a home with long-term rental value.  Buy a home that can grow with you and you’ll find yourself much more financially secure…and sane!

The current low prices and 30-year fixed mortgage interest rates aren’t likely to last forever, and that old adage remains true: buy low, sell high.  If you’re looking for a reason to start your home search in the area now, call me for a serious look at this June’s market.  

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