As stated in the aforementioned article, purchasing a home can be quite daunting. On the contrary though, receiving the keys to your new home is an unexplainable feeling. With endless opportunities in shaping and building a property to be uniquely yours, and even reducing your taxes or building equity, the pros significantly outweigh the cons.
Before jumping the gun and making a choice on your new home, you must stop and take a look at your situation and assess what exactly you’re looking for. How much can you really afford? Are you looking for a lifetime investment, or something temporary? What amenities best fit your lifestyle? Is this the right neighborhood for you? These and many more factors must be taken into consideration anytime you dive into the home buying process.
STEPS BEFORE BUYING
These five steps will help you decide whether you’re ready to buy a home, take into consideration it’s a big decision and process.
- You have a steady income, and reliable employment.
Your chances of a loan approval significantly increase after having a steady job for at least two years. Being able to hold a job for two years, almost always also means you’re financially stable enough to take on a mortgage.
- Making repairs won’t be an issue
Whether it’s fixing a broken, oven, refrigerator, or even plumbing, You can no longer call a landlord and have the issue taken care of, at no cost. You will be responsible for any and all repairs in your home. Although buying a home warranty and home insurance will take a bit of the load off, it rarely will come without a cost to you.
- Being able to financially afford a mortgage
Your payments are calculated using, your income versus how much debt you have. Usually this ratio is recommended to be at 36% to financially afford a mortgage payment. Mortgage payments are more often than not similar to rent, so if you’re struggling with a rent payment, odds are you will with a mortgage payment for a home of equal size.
- You don’t have bad credit.
Having amazing credit is no longer a large requirement for a loan approval. But having a score below 600 isn’t exactly ideal either. Similar to employment, having a good credit, like having a steady employment history, can work out in your favor. Exceeding a score of 650 can drastically improve your approval total and chances.
- You can efficiently save up for a downpayment.
There are various costs associated with buying a home. Some are upfront costs, and the biggest will be your down payment. You can expect to pay anywhere from 3 – 20% as a downpayment for most loans. Although DPA (Down Payment Assistance ) programs can help qualifying buyers, it doesn’t completely waive the down payment, and you’ll still be looking at a certain percentage to pay upfront.