Thats the key to making money in the stock market but how many can discipline themselves to actually do that? To buy when stock prices are low requires a strong stomach and a belief that things will get better. Dont you want to wait until the stock starts going up just to make sure you should really trust the trend before you buy in? Several months ago the talking heads on TV were all doom and gloom and yet today the market has recovered much of it losses. Timing the market is tough.
Housing markets also have their cycles, moving from sellers markets to buyers markets to a more balanced normal market. Does that mean you should sell your home just because prices have risen to a point where you can make a great return on your original investment? If it is an investment property, perhaps; but if its the home of your dreams, probably not. If you did sell, would you be able to buy it back when prices eventually cycled to the bottom in the next buyers market? What if prices dont go down for ten years or more or even worse, what if they keep going up?
Should you buy a new home just because of a buyers market? If you will be in the market to buy in the next year or two, would it be a good idea to buy now while prices are still depressed and interest rates are extremely low? YES. To take advantage of a buyers market, you have to be a BUYER. When the housing market cycles back to the sellers advantage, it will be too late. For the leading edge of the Baby Boomers, this is your last buyers market. Unless you are planning to stay right where you are when you retire, now is the best time to buy your retirement home and here are a few scenarios that will help you time the market.
Should you buy now?
You have significant equity in your current home or own it outright. At the peak of your career, you still enjoy a good income and can qualify for a conventional mortgage or an ARM for the purchase of a second home. You buy a home now where you want to live later and wait to sell your current primary residence until you actually do retire or until prices have recovered. Then you have the option of paying off the mortgage on your new home if the plan was to live mortgage free.
But what if you cant quite qualify for a traditional mortgage on a second home? The old way to tap into the equity of your primary residence was a home equity loan, but those are difficult to get these days. If you are over the age of 62, however, there is another option that can help you time the market a Reverse Mortgage. Qualifications are based on your homes value, your equity in that home and your age, not your current credit score or income.
Youre already retired, but selling your primary residence now means taking a lot less than it is really worth. A Reverse Mortgage in your area, lets say, would give you $250,000 cash with which to buy your retirement home now as a second home. You will make absolutely no payments with the reverse mortgage until your primary residence is sold and you will be buying the new home now for a great price when Cash is King. With this option, you can Buy Low and Sell High and have no mortgage payments for either home.
I am no expert on Reverse Mortgages, but there are well known, reputable and reliable companies that are and they can answer all your questions. Fees are front loaded and the perception is that they are pricey. If it allows you to buy in a buyers market and sell later when prices have recovered, how much of a difference could that make? What would your house sell for in one year or two? Do you live in a historically strong market where house prices could rebound by 10%, 20% or more? If your wealth is tied up in your current home and you plan to relocate when you retire, a Reverse Mortgage may be the answer that allows you to time the market.
You can also buy a home with a Reverse Mortgage. Depending on your age, you may need to have a 30% to 50% down payment, but you can then apply for a Reverse Mortgage instead of a standard mortgage. You pay the closing costs and live in this home for the rest of your life with no mortgage payment. Even if you live another 30, 40 or 50 years, you will never make a mortgage payment on this home. What about your estate? Any remaining equity in your home will go to your estate when it is sold.