How do you know when the time is right to buy your first home? Are you personally and financially ready to buy your first home?
Buying a home is one of the most expensive purchases you will make in a lifetime. Look at buying your new home as a business decision and not an emotional one. After all buying a home is a long term financial commitment.
You are ready to buy when…
- You have a reliable income source.
You are confident that your current income will stay the same or increase over the next few years. Buying a home is a long term commitment so you want to make sure that you are in a position to continuously make your mortgage payments.
2. You have a budget and know how to use it.
Owning a home comes with many expenses so money management is imperative. Tracking and knowing where your money goes every month is very important. A great place to get started tracking your spending and budget is http://www.bankrate.com/calculators/savings/budget-calculator.aspx. This will also give you an idea of the maximum you should spend on your new home and ideas on how to get your debts under control.
In regards to you “expected” cost of owning your new home. I would suggest doing some research in the area you want to own for property taxes, homeowners insurance, homeowners association dues, maintenance / upkeep costs, projected utilities as well as costs for commuting.
3. You have a savings for your down payment & additional funds.
You should be saving for a down payment but also emergency fund and moving expenses.
Down payment: most loan programs require a minimum of 3% – 3.5% down payment. There are loan programs out there the offer 0% down VA and USDA loans.
Additional Funds: I would suggest having additional funds saved after closing on your new home. You will have moving expenses and you will also want to plan for home maintenance and emergency fund. It is best to plan and prepared ahead.
4. Your credit score and report is in good shape.
The higher your credit scores the lower the interest rate and monthly payment on your mortgage will be. While you don’t have to have perfect credit you will need to be paid as “agreed” the last 12 to 24 months.
5. Get Pre-Approved.
Contact me to get pre-approved before going shopping for your new home. And as always if you have any questions please reach out to me.
One of the Many Benefits of Owning Your Own Home is Building Equity. You want to take advantage of building equity As the gap between how much you owe and what the property is worth widens, the equity in your home builds along with building your family’s financial foundation.