As Spring has sprung, the selling season is firing up for real estate shopping, but there are some new rules on the street for buying in today’s market.  The playing field is different with foreclosures, REO properties and traditional homes sales creating a full court press for marketing, pricing and selling leaving buyers looking at new rules of engagement when shopping for a home for sale.

There was an old standby rule from last buying season that people should wait to buy because the market had not yet hit bottom.  Well now the waiting is over.  It is impossible to predict when we will officially arrive at the bottom and that time will be different for every neighborhood across the country.  Additionally, even if home values continue to decline, interest rates are going to head in the opposite direction. 

Speaking of interest rates, reminds me of yet another old housing boom rule that you should definitely rewrite in your book and that is regarding how much you should spend on your mortgage or house.  People used to spend 35% of their gross household income to determine how much they could get a loan for and thereby dictating how much house they could get.  Now that the bubble has burst, it is a wiser choice to find homes that are a good fit to your household income.  This would mean that the old number 35% should be reduced to somewhere around 20% to 25% leaving your wallet less stretched when trying to make your monthly mortgage payments.  Still on the topic of mortgage payments, interest rates and smarter home buying rules, existing home owners should definitely refinance loans if they haven’t already.  Even with current interest rates rising, as long as it is still lower than your current rate, it’s worth the savings to refinance.

Another old adage that has taken new meaning is that it is better to buy than rent.  While throwing money away on rent was considered a waste of time in the past, it is not always a good rule of them in today’s market where homes are appreciating at a much slower rate.  If you plan to stay in your house for more than 10 years, then buying is still the best option, but if you plan to move again in less than 7 years, renting is the smarter option.

The final rule, or at least the last one we plan to mention today, is all about location and how while buying in the suburbs and outlying small towns was once a dream for many, with the changes in the economy and the greater movement toward greener living, more people are looking at homes closer to city centers.  So when you are considering re-sell value of a property you plan buy you may want to spend extra time considering location.