Suze Orman's All-Star Advice - Episode 2
Suze Orman: You know, that's a hard one to answer. Listen, if you can afford a house and it makes sense and you're going to live in that house, I'd rather see you own any day than rent. The problem is, many of you own homes that you can't afford to own. Many of you are thinking because the housing has gone down so much in value: This is the time to buy. Wrong. It's the time to buy when and only if you can afford it.
Tips for first-time home buyers
How do you know if you can afford it? You can put at least 20 percent down. You have at least eight months of an emergency fund besides the fact that you're putting 20 percent down. You're getting a steal of a deal because if you think this housing market is going to go up from here, I'm here to tell you, it's not going anywhere for a long time. If you think interest rates are going up from here, I'm here to tell you, they're not going anywhere for a long time. So, therefore, 20 percent down; eight month emergency fund; a steal of a deal—you have to get a good deal because prices could continue to go down. You need a 30-year fixed rate mortgage. If you can't afford a 30-year fixed rate mortgage, you can't afford the home. You have to know that you can afford the mortgage payment, the property tax payment, the insurance payment and the maintenance to keep that house. Otherwise, just continue to rent and do yourself a favor.
Next: A lot of people are still out of work. Will it get better?