Have you reached the point in your life where you have decided that you are ready to settle down? Do you think it’s time to buy your first home? There is a lot to consider before taking that leap. Becoming a homeowner is an exciting and rewarding achievement – and answering these questions will help you decide if you’re ready to make a move.
There are many pros and cons to purchasing your own home, and it’s important to make sure that it’s the right choice for you before you make the investment. In addition to the sense of accomplishment, homeownership offers tax benefits and financial security.
Is homeownership right for me?
Before you buy your first home, it is essential to do a bit of self-reflection. Do you have a stable income and are you not likely to be transferred any time soon? If not, perhaps owning a home is the best option for you right now.
Does it make sense financially for me to buy a home?
To purchase a home you will need to prove a stable income for at least two years with the same company. Having a stable employment history is a good indication that you are ready to buy a new home. This is one of the most significant decisions in your life, and it is essential to make it based on your needs. Too often, buyers over-purchase their home, resulting in being house poor. Be sure to take a conservative approach when making this decision.
Will I be able to buy as much house as I can rent?
Depending upon the current market, it is often more cost-effective to purchase a home than to rent a home. Your debt-to-income ratio will determine the amount of the mortgage you will qualify for. A debt-to-income ratio no higher than 36 percent is considered the norm.
Is my credit history good enough to buy a home?
Your credit score is a significant factor when purchasing a home. The better your credit score, the better the rates and the terms that will be available to you. That doesn’t mean you won’t be able to find financing if you have a less than perfect credit score. If you can prove your ability to repay, lenders will work with you to obtain financing. A credit score of 640 or higher significantly increases your odds of getting approved.
Can I afford to purchase a home?
For many first home-buyers, the down payment is what prevents them from buying a home. Fortunately, some programs offer low or no-money-down payment options. The Department of Veterans Affairs offers no money down loans to U.S. military veterans, and the U.S. Department of Agriculture provides a zero money down program for purchases in rural areas. There are also low to moderate-income options available in most communities. This includes FHA loans for the first time homebuyer, which requires only 3.5 percent down. Talk with a qualified mortgage professional to learn more about your options, including terms and interest rates.
Do I see myself in this home for the long haul?
When considering the purchase of a new home, it is important to look at where you want to be in five, 10 and 20 years. For your investment to bear a reasonable return, you need to commit to staying in the property for a minimum of three years to recoup your initial investment. Buying a home is cheaper than renting but only if you are committed to staying.
What does the current housing market look like?
Before purchasing a new home, become familiar with the current real estate market. Is it a buyer’s market or should you wait and see where things are going? It is easy to get caught up in the frenzy when prices are on the rise; however, you want to make sure that you aren’t overpaying which will make you end up owing more than the property is worth.
If all signs point to “yes, it’s time to buy your first home,” what better way to start your new life than to meet with a new custom home builder. Contact Passage Island Construction to find out all of the options that are available to you, from new home construction in one of our communities to building a custom home on your own lot.
Of course, it’s very wise to first contact a mortgage professional and find out how much home you can afford based on your financial position. As soon as you are pre-approved for a mortgage, you’ll be in an excellent position to begin the search for your new home – or to start building a brand new one, with everything that you want in a new home right where it’s supposed to be.