Buying a home is a major investment and one that should not be taken lightly. Simply looking at local property values, starting to feel the desire to own, and having adequate income may seem like the only requisites to making the decision to buy. However, if you base your decision to buy a home solely on those factors, you could be cutting yourself short at best – at worst exposing yourself to serious financial risk. This is especially true when property values are down or deflated, such as now.

If you are plan to buy a home soon, you should know that buying a home in a down economy has its benefits and drawbacks; weigh them carefully before making a decision:

1. Property values will likely fall again, soon: If your decision to buy is spurred by the recent leveling of property prices, think again. Housing prices will likely be falling even further in the months to come. According to Glenn Kelman, chief executive of the Redfin Corporation, a real estate brokerage located in Seattle: “Things aren’t going to get better any time soon… Until recently, the sellers were looking at data from April, when there seemed to be a recovery in the works. The buyers were looking at unemployment data and general lack of consumer confidence. Now you’re going to see the logjam break. The low sales figures are going to force sellers to make the first move.”

2. Interest rates will continue to fall: Home loan interest rates may be low, but they are falling fast. Current forecasts estimate that the average home loan interest rate will fall another 10 percent, reaching its lowest point at the end of October. As such, waiting a couple months to buy could save you tens of thousands in interest over the course of your home loan.

3. When property values are low and interest rates are low, you can negotiate better terms: To put it simply, interest rates are low because banks are trying to attract qualified buyers and, when lenders are courting customers in this way, it is clear that they are doing so in order to remain competitive. Accordingly, if your lender thinks that you could easily obtain financing from other sources with terms just as favorable as those it is offering, you may be able to negotiate other mortgage terms, effectively doubling your savings. For instance, you could negotiate for reduced closing costs or get your loan origination fee waived.

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