OWNING REAL ESTATE HAS BEEN AN INTEGRAL PART of the American dream since time immemorial. There is significant pride and a sense of security in owning your own home. With the recent economic realities, though, this dream turned into a nightmare for many — replacing their sense of security with a tremendous sense of fear and insecurity.

Though the realities of our economy remain difficult, there is some hope in the housing market, and so you may be asking yourself if this is a good time to explore purchasing a home or perhaps selling your current home in order to purchase a more suitable home.

Historically, owning your own home has been a smart decision. Economically, it just made good sense. You got many benefits from home ownership that you did not get from renting, and the common view was that it made more sense to invest in your own future rather than continue to pay someone else’s mortgage. This belief generally held true until the last decade, when real estate values soared and the idea of owning a home for shelter was replaced by the idea of real estate as a neverending source of increasing wealth.

As shelter, real estate was, and is, a good idea; as a no-lose investment scheme it proved disastrous. The decade of excesses brought us a prolonged and painful period of adjustment.

Now, as the market seems to be returning to some level of normalcy, the concept of real estate as shelter has returned. This in mind, should you, and can you, purchase a new home? Yes — but it is imperative that you have the guidance of professionals. There are numerous variables to every situation and to each individual’s financial goals, and only a qualified professional can truly assess your situation and help you weigh the variables unique to you and your family.

There are three pillars that should be evaluated to determine whether this is the right time for you to purchase a home.

First, the ability to make the monthly mortgage payment seems obvious, but in reality affordability has different definitions for different people. Perhaps you’re a young couple just getting started in your careers, with expectations of sharply increasing incomes. You may want to take on a slightly higher payment obligation with knowledge that your income will grow into the payment quickly. On the other hand, you may be that same young couple and one of you plans to take extended time away from your career to raise your children. In that case you’ll want to use a smaller percentage of your available income. These are just two examples of the myriad of possibilities.

The second pillar is credit. Over the last decade, the criteria used for underwriting credit has become tougher, and in the wake of one of the worst recessions in our history many have taken a serious beating to their credit rating. That’s the bad news. The good news is that there are programs to assist you if you have experienced challenges.

The number one question I am asked is, “How long after a short sale or foreclosure do I have to wait before applying for a new home loan?” The answer is, it depends: Generally speaking, three to five years is the rebuilding period. There are exceptions that can significantly shorten or lengthen this period. Seek guidance from a professional, because everyone’s situation is different. If you’re facing the reality of a foreclosure or a short sale, the sooner you can get with a mortgage professional to make a plan for rebuilding your credit, the better. A little time spent planning now will pay off when your financial situation improves.

The third pillar in deciding whether to buy a home is the amount you plan to invest into your new home. Again, there are numerous variables. If you have the luxury of a substantial down payment, your options are greater and you will receive more favorable terms. However, our government is serious about helping you become a successful homeowner, so there many programs available, ranging from low down payment programs to down payment assistance programs and tax credit programs. And there are special programs — for teachers and municipal workers, first-time home buyers and, of course, veterans.

The housing market has reflected some very positive signs in the last few years. If you’re considering purchasing a home for shelter and for the long term benefits of homeownership, it is worth investigation, at the very least. You may find this is not the right time for you and your family. Or you may find that buying a home now is a very positive step forward.

Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or guyb@fairwaymc.com.height=”150″ />

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