September 18th, 2014 9:57 AM by Jackie A. Graves, President
Answering these eight questions will help you
The idea of owning your home is an exciting
one, but how do you know if you’re ready? Before you take the plunge, answer
the questions below.
What’s your financial situation?
Having a clear understanding of your finances
is necessary when you’re considering buying a home. Prior to speaking with a
real estate agent, you should make a budget to see how much you can reasonably
afford to pay. Don’t forget to factor in the cost of taxes, insurance premiums,
maintenance and other upkeep.
Can you afford even the initial costs?
Down payment amounts vary based on the type
of loan you’re offered or if you’re eligible for a first-time homebuyers’
program, but remember that the more you put down, the lower your mortgage
payments will be.
Other initial costs can be substantial: loan
set-up fees, home inspections, insurance, property taxes and other fees will
cost you about 2 to 4 percent of your home price.
Is your money organized?
Hopefully you’re the kind of person who
balances your checkbook and understands where your money goes, but if you take
a more lackadaisical approach to your finances, you’ll need to step up your
game. Get organized, check your credit report and keep building your savings.
Getting your affairs in order helps you improve your credit score, qualifying
you for better interest rates, and good financial records will help you take
full advantage of tax deductions.
What are your future expenses?
Think ahead to the next few years. Are you
making any big life changes that will hit your wallet hard? If you’re planning
to have children or start paying tuition soon, you should factor that cost into
your decision now. It can become difficult to replace an aging car or take an
expensive vacation once you’re paying a mortgage.
Do you have an emergency fund?
Before you devote all your savings into a
down payment or upkeep for your house, look at the bigger picture. You need to
build a financial cushion in case of financial setbacks like unexpected
unemployment or serious illness.
It’s not just money that should affect your
decision to buy a home.
Are you flexible when it comes to getting
what you want?
Your first home may not have all the bells
and whistles you’re looking for. Are you willing to defer on your wish list now
in order to have a home of your own? In a few years, you may be able to find a
home that better suits your needs, but in the meantime you could also consider
fixing up a less expensive home, buying a home with friends or renting out part
of your home for additional income.
Do you plan to move in three to five years?
There is a lot of effort, time and cost
involved in buying a house – you want to make your investment pay off for you.
In addition to the price of the house itself, you should also take into the
set-up costs already mentioned.
If you’re planning to move in a year for work
or school, you may want to wait until after that time. Otherwise, you might
find yourself in a tough spot if you’re forced to sell your home for less than
its purchase price in a slow market.
Do you enjoy home improvement?
If you’re already looking at homes, it’s hard
not to imagine how adding a fresh coat of paint to the walls or changing the
light fixtures will make a house truly yours. But if you’re used to calling the
landlord for anything that goes awry in your home, owning a house might be a
jarring wake-up call. When you own your house, any issue becomes your
responsibility, from replacing blown electrical fuses to installing a new roof.
Now is the time to consider whether you enjoy
home improvement projects. Are you confident in your ability to patch drywall
or install a ceiling fan, or would you rather pay someone else to do it? If
it’s the latter, consider that even if you hire someone else to handle your
home improvement issues, you will still have to invest not only money but your
time by researching contractors and supervising their work.
Once you’ve answered these questions and
taken the first steps toward purchasing your new home, be sure to find out the
going home values in your area – just plug in an address at www.realtor.com to
see current rates and recently completed sale prices.
By Tasha Schroeder |
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