Published in the Florida Keys newspaper, “The Keynoter”

The end of the housing bubble in Monroe County has opened opportunities for a lot of you to finally afford a house of your own.  That in mind, I thought it would be good to review some of the rules of thumb accompanying homebuying in a sane economy.

Let me start with this: There are some very good, very honest, very helpful realtors and mortgage lenders in Monroe County.   Unfortunately, there are also a lot of unscrupulous people claiming that as their profession.  (Quite a lot fewer of the latter than there used to be, though.)  Far too many people in America right now are finding out that they have a much more complicated, and much less consumer-friendly, mortgage than they thought they did.  Work with people who have long track records and good word-of-mouth.   Ask around.   You should put at least as much thought into your choosing your realtor or lender as you would into a surgeon or a nanny.  They’ll have a longer-term impact on your life.  A little homework could save you a lot in the long run.

Home-buyers:

* Save a down payment.  If you can’t come up with a down payment, you can’t afford a house.  Someone who offers to “help you find a way around that” is not helping you.

* Figure out how much money you can reliably afford to pay per month, not how much you can possibly afford to pay per month.  In a project that will be filled with numbers, this is the most important number for you to identify.  And be careful who helps you figure this number out.  Realtors and lenders can be useful to you, but unless your lender and/or realtor is also your mom who loves you, you will need more opinions.

* Your goal is not to buy the most house you can possibly get approved for.  Your goal is to buy the most affordable house that will meet your needs.

* Don’t panic-buy.  Get three drinks in any realtor and they’ll tell you the market will be flooded for years.  There are bargains out there, but they are not “going fast.”  You have plenty of time to make an intelligent decision.  Beware the “Better hurry up if you really like it” hard sell.

* Speaking of which, it is very difficult to take emotion out of the homebuying process.  People know this.  Try to be Mr. Spock.  Jumping up and down and drinking champagne comes after you buy the house.  If it comes while you’re choosing the house, you’re being sold on emotion, not logic.  Don’t do it.

* Do not be sold on appreciation potential.  You are buying a house primarily to live in, not as an investment vehicle.  If you don’t love it, don’t buy it.

* Once you own the house, DON’T OVERPAY YOUR MORTGAGE.  If you have extra money every month, save it for the day that you don’t.

And for those of you licking your chops at all the “bargain investments”:

* Real estate is highly illiquid.  You cannot use a house as your sole retirement savings and still have a reliable retirement date.

* Investing in more than one house on more than one island does not constitute a “diversified portfolio.”

* Real estate appreciates long term, not short term.  And it’s still volatile.  And it has expenses other investment vehicles don’t; a tree will not fall on your portfolio and cost you money out-of-pocket on the spot.

* Your house is not an ATM.  Be careful with that home-equity line of credit.  Home improvements yes.  Boat, no.  Fourth home, double no.  And what I said about mortgage lenders and realtors goes for people selling home-equity loans, too.

* And finally, yes, some people did make an awful lot of money flipping houses.   But past performance, as you may have heard, is no guarantee of future result.