Before a House Purchase
Buying a house is exciting, but it is also a big step both financially and emotionally. How do you know if you are really ready for home buying? Here are some simple guidelines to help you decide if you are ready to begin buying your first home.
What is Your Credit Rating?
A good credit score means you can qualify for better rates when you buy a house and apply for a mortgage. Check out your credit score, and if problems are found, see what you can clear up to improve your score. This small step can improve your buying power dramatically, and ease your mind during the house buying process.
Can You Afford the Monthly Payment?
Most people cannot afford to purchase a home with cash, so home buying generally involves a monthly payment that includes mortgage and real estate taxes. The higher the down payment you are able to put down, the lower your monthly payment will be. To get a rough idea:
* Research home prices and local property taxes in areas where you might want to buy a house, and subtract what you have available for a down payment.
* Contact lenders to see what it would cost you each month to finance the difference, and if you qualify. Remember to add the estimated property taxes to the loan payment to give you a ball park figure of your total monthly mortgage payment.
If the payment seems manageable, you are on your way to starting the house buying process. If not, you may want to consider a less expensive house, or give yourself a year or two to save money before buying your first home.
Is Your Financial Situation Stable?
In order to qualify for financing and be able to meet the financial obligations of buying and owning a house, you’ll need to be in a stable financial situation. A mortgage usually involves payments for 15 to 30 years, so stable employment or dependable income from other sources is essential. While no one can guarantee the state of his finances for the next 30 years, you should be confident in your ability to bring in a steady income before you buy a house.
Other Costs and Expenses
Home purchase and ownership brings other costs and expenses that you should be prepared for before you buy a house. Be sure to have enough savings and income to cover:
* fees associated with buying a house, including attorney fees, closing costs, title insurance and title search
* maintenance and repair of home appliances, exterior, interior and property
* utilities such as electric, heating, sewer and water, which may not have been your responsibility as a renter.
Remember to factor in existing ongoing expenses that will continue during the home buying process, and after you buy a house, such as:
* clothing
* entertainment
* groceries
* internet, phones and television
* medical costs
* transportation.