Buying vs. Waiting

Disclaimer: These are only my thoughts. This post is meant to be informative for me, as well as thought-provoking for others. I am not commenting on any particular situation, nor do I intend to prod at anyone's particular situation. Just making observations and trying to learn something in the process. My hope is that I can help some readers who are curious like me as well! I normally wouldn't add a disclaimer, but since a lot of people are finicky about discussions on money, I wanted to let you know I'm trying hard not to be offensive.

Although, as I already mentioned, I am currently in no rush to buy a house, it seems like a lot of other people are. As we all know, since the economy is pretty tanked right now, the housing market is pretty appealing. There are foreclosures, deals, and low interest rates. On the other hand, as enticing as a deal may be, it only makes sense to act on one if you have the means. 

Awhile ago I was reading and learning a lot about money. Being a recent grad who only started earning retirement benefits from my job this past summer and currently lives with her in-laws, I'm by no means an expert on budgeting, finance, or investing. But being that same person, I also know that now is the perfect time to become one! (Or just learn a teeny tiny bit.) From the reading and discussing I did, I gathered that to make a wise home purchase, a few things are required:

1. A hefty down payment (greater or equal to 20%)

2. A mortgage rate within your means (gross income equal to about 28% of your total home purchase price)

3. An emergency fund worth 3-6 months of your spending budget (in liquid assets)

4. No debt (no student loans, overdue credit card payments, car payment)

5. (Am I forgetting anything?)

Now, maybe I'm missing something, but when I see a lot of young couples fresh out of college buying homes, it makes me wonder how they're doing it. I'm sure there are always circumstances that aren't visible to an on-looker, but either way, it doesn't always seem like people follow the principles I listed above (gathered from Matt Bell's Money Purpose Joy, and Dave Ramsey's Financial Peace Revisited).

Because of all of this, I have come across a dilemma. It might spur up a debate, but that's good! I am just wondering for my own sake, as Whit and I try to form godly attitudes and make informed decisions about our plans for the future. So, here is the question:

Do you think that it is more wise to act on a good deal, even if you don't meet all of the above principles (e.g. have some debt, don't have 3 months savings, can't put 20% down) OR wait until you meet all of the above requirements, even if that means waiting until interest rates and purchase prices are much higher?

My thoughts are that even if something is a good deal seemingly, it doesn't become a good deal for you unless you can afford it. Practically I mean to restrain from buying something that's a good offer until you're absolutely ready. For example, you find a house for sale with pretty low interest rates and is a reasonable price; however, if you bought the house you would have to spend ALL of your savings, leaving little to nothing in the bank. Or maybe you can only put 10% down. To me it seems wiser to wait until you have enough money for a down payment and still be able to have emergency savings and then buy a house.

However, the big debate/unanswered question is the idea of the investment. That is, even if you are maxing out your budget, you're putting your money towards something that will *hopefully* produce a profit for you in the future. In my opinion, from what I know so far it appears that even though something is an investment, it's not a wise idea to buy it if that means it would be putting you into financial strain or potential financial strain due to not having much money in savings because of whatever else might come up (home maintenance, losing a job, needing to replace a car, unexpected medical expenses, or even just taking into account the possibility of having to foreclose if you need to move but can't sell your house for enough money.)

So that's just my opinion, but what I want to know is what do you think?

[In order to not embarrass anyone or call anyone out, I am including an anonymous poll at the top right of this page. Simply choose which option you agree with, or choose other ONLY if you explain your thoughts below. I would love to hear from anyone and everyone about your thoughts on this topic; please feel free to post anonymously if you wish to remain unknown. I would love to hear lessons learned from personal experience from those who are older as well. Thanks for participating in this discussion!]