Usually everyone goes through this at least once. The nerve-wracking decision of whether to buy a home. I remember my first thoughts about it. It was both exciting but scary at the same time. Most of the time, it is the wondering whether it is the right decision to make. There are a few ways to settle this by looking at what you need to know before buying a home.
First of all, don’t go buying a home because everyone else is. This is your decision and your money. I know many people who are quite content with renting forever. In fact, they love it and would never buy a home. They don’t want the commitment or the maintenance that comes along with it.
Do you really think it is time to for you to purchase a home? Take a closer look at these questions and start examining your answers.
1. How long will you be living there? Do you plan to move within a few years? If you are planning on a move, it may not be a wise choice to purchase a home right now. It is easier to pick up and move when you are a renter than when you own a home. It could take a long time to sell your home and can have serious financial implications in the mean time.
2. How is your credit history and credit score? In today housing market, you will need a score over 680 to get a good mortgage. If your score is lower than that, start to improve it before heading out to purchase a home. Start paying down credit cards and any other loans you have showing up on your credit report. Make sure there is nothing negative appearing that can be questioned when you apply for a mortgage.
3. Do you have at least the 20% required for a down payment? In some areas, that has increased to 25% or more required. If you don’t have this amount of money, you need to start saving while at the same time investigating what is available to you through your state in the form of a grant or bond. The less you put down on a home, the more private mortgage insurance you will pay each month. This is also true of FHA loans. Don’t forget. The mortgage bank is going to be looking for a history of saving money.
4. Have you looked at the average price of homes in the area you are looking to buy in? Can you comfortably afford a home? With a little research done on the internet, you can figure out an approximate mortgage payment. If the payment seems too high, it probably is. To make this work, your debt to income ratio should be around 36%.
5. Have you checked the schools and shopping in the area? These are two things that are often overlooked when getting ready to purchase a home but can become an issue in the future.
If you have answered these questions about what you need to know before buying a home and you are still comfortable with the idea of purchasing, then it is time to seek out a buyer’s agent who will have your best interest in mind.
If you have a story to share about purchasing a home, please share it by posting it below. Maybe you have changed your mind and have decided to wait a little longer. Let us know your reasons.