To buy or not to buy (a house)? That is the question.

  This is one of the most frequent questions I get from friends outside of the routine “what’s the hot stock” question.

It’s one of those questions that friends ask as we are walking to the bar for a drink or during a quick ride.  Unfortunately, the question can’t be completely answered within those two minutes.

Just like my answer to the hot stock question (boring), the answer to the buy or not buy a house question tends to be identical (boring).

Checking the life box

We all want a checklist or a game plan that tells us specifically when a decision should be made at every level in life.  For example, at age 26, buy a house, then at age 28, with $10,000 in savings, get married, etc.  Some type of checklist like this makes us feel comfortable.

The unknown outcome of all our decisions, the “what ifs,” makes those decisions stressful.

For me, one of these situations came when I went off to college.  I packed up and moved across the country… knowing only one person.  What the hell was I doing!?!

Anxiety was an understatement; uncomfortable wasn’t even close to how I felt.  I would have loved for someone to tell me my future —you will join a fraternity you like during the first month, you will make some of your best friends and then move into the fraternity house.  You will then meet a girl, break up with that girl and move out of the house. Then move into a new house with two of your best friends.  Live with them for two years, graduate.  Then, before you know it, be back in your comfort zone of Atlanta.  Oh, and along the way, you will play golf three to four days a week.

That may have reduced my anxiety.

Today, though, I want to make you uncomfortable, and get you to feel that anxiety.

I want you to enter a state of unknown.  By answering your question of whether to buy or not buy a house will relieve one anxiety but create many new levels of anxiety.

I think it is a great time to buy a house, which now means you will enter a period of wondering if you are really ready.  Here is why you should buy now.


3 Reasons To Buy Now


Reason 1:  Borrowing money for nothing doesn’t happen often

The cost to get a mortgage is nothing relative to historical measures.  Historical means the longer term average or what it was when our parents bought a house.

If you are still upset that you missed the extreme low mortgage rates of the recent past:  GET OVER IT!  You still have an opportunity to put yourself in a great spot.

Freddie Mac home mortgage in the southeast

Look at the chart above with 30-year mortgage rates for the Southeast.  It shows the drastic levels we are at.  These are levels we have never seen going back to 1976.

That was the year the first Rocky was released… five others have been released since then!

The breakdown:  the median (middle) 30-year mortgage rate (in the Southeast) going back to 1976 has been 7.95%.  And today, it is about 4.25%.  The difference in payments for these on a $250,000 mortgage is $595.85… per month.

Over the 30 years of the mortgage that is equivalent to $85,802.40… probably enough for another down payment.

Buying now is actually a bargain… savings are realized relative to rates that have been paid and will be paid again.


Reason 2:  Invest in your future happiness

Not only should buying a house make you feel proud and happy today, it actually will make you happy in the future.

No, not because it will be paid off and you’ll live in it forever… that’d be way too boring!

Your first house does not have to be the house you want to live in forever. It may not be big enough for the future family you desire.  That’s fine.  You can still make it your forever house.

Remember that you are borrowing money at near nothing rates.  This bodes well for a future rental home opportunity.

Based on my partner, Wes Moss’s recent book “Retire Sooner Than You Think,” multiple streams of income are a key driver to being happy when you retire.  Actually, his nationwide survey found that a happy retiree has an average of 2.6 streams of income.

Let’s think through where our generation will get those income streams:

-          Social Security:  Nope

-          Pension:  Nope

-          Investments:  Yes

-          Government Pension:  Dependent

-          Part time work:  Maybe

-          Rental Property:  Could be a YES


To me that looks to be roughly 2.5 streams of income; investments and real estate as a yes and then part time work as a maybe, we deem that as a half (or 0.6 for purposes of the survey results)!

Real estate in that situation is your key to getting to the happy threshold and today is a great time to get there.  Be happy, you deserve it.

You can take Wes' Money and Happiness Quiz to see if you are on track to be a happy retiree.


Reason 3:  Because your friend will still want to rent

This isn’t a bad thing; actually, it is a really good thing for us if we buy a house.

It’s beneficial in three ways:

-          We get to live with our friend - Very good.

-          We provide a place for our friend to live - Very thoughtful.

-          Our friend pays rent, which helps us build equity in our house - Very thoughtful by the friend and very rewarding to us!

Just go back to the earlier example of a $250,000 mortgage.  If the rate of the mortgage is 4.25%, then our monthly mortgage payment would be $1,229.85.  Being able to cut the cost of our large asset (a home) in half allows for us to pay off other debt (which we shouldn’t have) and also save/invest.

And we should be able to earn more in the stock market (over the long term) than 4.25% per year, which is our cost on the mortgage.

Just think, paying your mortgage is costing you 4.25% per year, which goes to the lending bank.  If you were to invest and earn 6% per year, who wins?  You or the bank?  You.  That sounds good to me.


Feeling overwhelmed?  Or excited?

The feeling of change also causes many people to hold off on such a big purchase.  And that is completely understandable.

Buying a home should not be taken lightly.  It is a big step.  I mean, hell, it kind of means we have to grow up!

Either way, the current economy is providing us all an opportunity to really invest in our future.  And sometimes the first step that needs to be made is an uncomfortable one.

Wela is currently putting together a Home Buying Boot Camp. If you are thinking about buying your first house, or just looking for a home buying refresher as you get ready to buy a new house, try our home buying boot camp to get into “home buying shape.” We will have this program launched by June 30th. Sign up here.