Are You Ready To Buy A Home?
Buying your first house is a big purchase. It is the largest financial decision most people make in their lifetime. Buying is something you should preemptively think about and plan out. There is a lot of information out there, so it can be confusing to know if you are ready to buy a house. Here are five questions you should consider before buying a house.
Are Your Finances In Order?
Ask yourself, are your finances in order? Do you know your credit score? Is it at a healthy spot? The bank uses your credit score to determine how well your handle credit. If you have a low credit score, it will affect your ability to buy a house. Also, consider your debt. Credit card debt, student loans, car loans, and whatever else you may have. Having some debt is okay, however, if you feel like you are drowning in debt, and are struggling to make payments or keeping up, another loan for a house may not be the best solution for you. If you always have to use a credit card, because there seem to be more bills than money, reconsider buying a house. After analyzing your financial situation, you’ll have a better idea of where you’re at and if you’re ready to purchase.
Have You Saved Enough For A Down Payment?
The next point to consider when you are looking to buy a house, is have you saved enough for a down payment? Generally, 20% of the selling price is what is recommended for a down payment on a house, however, you can buy a home for as little as 3.5% down. The amount down will vary by person to person. But, just because you have money for a down payment, you can’t forget about the other fees. There will be more costs, such as closing costs, insurance, and taxes that will need to be paid. You may also want to do some renovations or upgrades when you first purchase a home. There is also the cost of moving, which can add up, even when doing it yourself. All these fees and costs need to be considered, to ensure you can afford a house.
Can You Afford A House Payment?
It is recommended to keep your house payments under 25%-28% of your take-home income. So do the math and figure out an estimate of what this amount should be for you. Often, your principal and interest on a mortgage loan can be kept comparable to a rent payment, yet, there are other costs to consider. You will also need to be prepared to pay property taxes, insurance, HOA fees if any, and city assessments. Utilities including water, sewer, garbage, and electricity are all other fees that you will need to consider in your house payment.
Are You Ready To Settle Down?
Buying a house is a long term commitment. It is generally recommended to stay in your new house for at least five years. Generally, home prices appreciate 3% per year, so after a year or two, your appreciation might not even cover the closing costs. The New York Times has a helpful calculator that can aid your decision to rent or buy. Consider your career, will you be switching jobs anytime soon? Because the purchase is a long term commitment, it is not easy to just up and leave. If you were to move, you could turn your house into a rental property. However, that requires the work it takes to be a landlord. Deciding if you are ready to settle down is a huge factor in deciding whether to purchase a home.
Can You Fix Home Issues
Finally, the last question you should consider is can you fix home issues? There is no landlord to call if there is an issue with your house, and problems are bound to come up. Things like a broken washing machine, leaky sinks, or a heater going out, are all a part of owning a home. Consider if you can fix problems that arise yourself, or if you can afford to pay others to fix these issues.
If you have considered all these questions, and feel you are ready to purchase a home, The Lemmon Team at KW Realty is ready to help! Feel free to contact us with any questions or concerns you may have. We can set up a meeting to discuss your wants and needs. If you weren’t able to answer yes to all these questions, it’s okay! Buying a home is a large purchase, and there is no need to rush. Our team can still meet with you if interested, and go over options that may better fit your needs. To learn more about buying a house, read our other blogs.