Kudos to the editors at Forbes for this month’s thoughtful offering—a checklist that can clarify the advisability of buying St. Cloud homes “in this hot real estate market.” The six questions combine to create a personal inventory that prospective St. Cloud homebuyers can use to gauge the timeliness of a commitment to buy in this spring’s busy season.

While much of the rest of the real estate and financial press spent last week speculating over whether a U.S. residential “bubble” was either forming or about to burst (none of them thinks so), Forbes contributor David Rae’s questions were more valuable for homebuyers with legitimate concerns about the advantages of buying right now. Here are the questions—

1.      Will I be willing to live in this home for at least five years? If not, buying now would probably be closer to a break-even proposition than the effort and expense justify.

2.      Will the all-in cost of this St. Cloud home be less than 28% of my gross income? If not, a purchase might leave you “house poor.”

3.      Can I afford a 20% down payment? Although a ‘no’ isn’t certain to be a disqualifier, ‘yes’ makes it very likely that you are well-positioned to afford a new St. Cloud home.

4.      Can I handle a drop in the value of the property? Author Rae points to a personal experience since his own house was “underwater” for the first five years that he owned it. That didn’t make him happy, but in reality, it didn’t matter. It’s now worth twice what he paid for it.

5.      Do I need to buy a house right now? This depends on your own personal situation, and gauging the market won’t help. Yes, prices are high, but mortgage rates may go higher—or even much higher—so it might be prudent to act. If your dream home comes on the market and you can afford it, standing by “while waiting for a dream price” might mean losing the best chance to own.

6.      How much work will the property need? With remodeling costs on the rise, prudence dictates being clear that buying won’t entail taking on more than you can afford—the prices you see on HGTV are far less than what you’ll pay today.

Author Rae is a Certified Financial Planner who champions a wide variety of ways to build wealth. Although not owning a home “doesn’t mean you can’t be building wealth over time,” he subscribes to the majority opinion: owning a home “is a smart long-term financial move.” Of course, I agree—and when the time seems right for you to buy (or sell)—do call me!

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