05/18/2012 06:48 pm ET Updated Mar 18, 2013

Taking the Plunge: Considerations for First-Time Homebuyers in Today's Housing Market

The spring and summer months not only signal wedding season but usually also include the annual home-buying rush. In the past, it's been common for a couple to get married and buy a house together. But the housing market today is unpredictable which raises the question: how will the unstable housing market affect first-time homebuyers as they enter the market?

The Housing Market's Impact on First-Time Homebuyers

A recent survey by the National Association of Realtors (NAR) found that almost seven of 10 Americans believe buying a house is a good financial decision. That sounds like a lot, but that number is actually down from the previous year as worries rise about job layoffs and unemployment. Meanwhile, home ownership rates (less than 65 percent) are at their lowest level since 1997, according to a U.S. Census Bureau report.

Although borrowers have been hit hard by the weakened housing market, you shouldn't let the flood of negative news limit your options. If you've been contemplating buying a home, it's a great time to be opportunistic. Renters and prospective first-time homebuyers are able to purchase their dream home with a rock-bottom price tag and take advantage of historically low interest rates, as long as those home-buyers can qualify.

Housing Options: Continue Renting or Buy Now?

With such attractive options available for first-time homebuyers, renting is normally not a sensible choice, at least from your wallet's perspective. In addition to climbing rental rates, postponing your first home purchase means you run the risk of missing out on bargain-basement interest rates and all-time high home affordability (although we're already starting to see signs of price stabilization).

On the other side of the same coin, potential first-time homebuyers have to face the possibility of rejection (from your loan officer) because of the nation's limited access to credit. Low credit scores, limited credit history, high debt-to-income ratios and small down payments can label many would-be homebuyers as a default risk.

Even if the stormy housing market and tight lending standards keep you from taking the plunge, it's still a good decision to build an emergency fund and save for a future down payment. Don't forget that housing costs extend beyond the monthly mortgage payment; maintenance costs, furnishings, insurance and property taxes should be calculated as well.

With that said, don't let external factors dictate your housing decision. Focus on your personal and financial situations before diving in.

Are Homes Still Good Investments?

Those who have had to take a loss on the sale of their homes would argue that homeownership is more a liability than an asset. But without the possibility of any financial gain by renting, buying a house is typically a better financial choice in the long run. There are ways to improve the odds of building equity in your home such as taking out a shorter-term mortgage so you pay less in interest each month, locking in low mortgage rates, and choosing homes in growing markets.

Bottom line: it wont hurt to evaluate your options. Know what you can afford, take a look at what's available and what makes financial sense for you. We have a turbulent road to recovery ahead of us but that doesn't mean you have to postpone your dreams of owning a home.