Is It Time to Buy a House
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Is It Time to Buy a House?

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Is buying a home out of your reach? Doesn’t it require large sums of money, stable employment, piles of forms and so on and so forth?

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You’re tired of trying to sleep while the herd of horses living upstairs gallops across your ceiling. You’re done waiting for the maintenance man to show up so you can finally wash the dishes and you can no longer look at the mysterious purple stain on the bedroom carpet. Renting gets old. But what else is there?
Is buying a home out of your reach? Doesn’t it require large sums of money, stable employment, piles of forms and so on and so forth? While buying a home will never be a day at the beach, it’s well worth the effort if you’re informed and prepared.
Are You Ready?
Deciding to buy is a big step. Save time, money and frustration by asking these crucial questions before you go house hunting.
Have you held down a steady job? You need to have been employed for at least the past two years without any unexplained gaps.
Can you come up with a stash for the down payment? You’ll usually need a minimum of 5 to 20 percent of the purchase price as a down payment, plus money for closing costs.
Do you have constant cash for a monthly payment? The monthly payment will depend on the amount borrowed, interest rate, insurance, taxes and repayment period.
Now What?
Build a healthy credit history. The first key to buying a house is establishing credit. This determines the interest rate and amount you are eligible to borrow. Having a credit card or student loan in your name is the first step. It’s also a good idea to check your credit report for errors.
• Get pre-approved. You need to be pre-approved before going gung-ho with your home search. A variety of financial institutions offer mortgages, including your credit union. They will check your credit, verify employment and savings for the down payment, and send your application to secondary lenders for approval. Having a documented dollar figure allows you to look for the perfect pad in your price range. Sellers will take you much more seriously than a buyer who is just “window shopping.”• Know what you want in a house. Do you want a sleek studio or a pretty pink ranch with a white picket fence? You are about to invest a nice chunk of change and will have plenty of options to consider, ranging from the number of bedrooms to the type of neighborhood. For example, just because you don’t have kids doesn’t mean you should disregard the quality of nearby schools. Unless you plan to live in this house until you’re 75, you will want to sell someday. A higher quality home in a good neighborhood will sell faster and at a higher price. Look at the whole picture.

• Find a real estate agent. When choosing an agent ask your friends. Interview several candidates to find one you are comfortable working with and ask for recent referrals. Be sure they know the local market, treat you fairly and show only the kinds of properties you want. You will spend a lot of time with this person, so it’s important to trust them. Fresh breath is also a plus.

• Know what you can afford. A good rule of thumb is two and a half times your gross household income. Looking beyond the loan, it is suggested to use no more than 36 percent of your monthly gross income for monthly housing expenses. These include your mortgage, house insurance, taxes, car loans and credit card payments. Don’t be tempted to drain your savings account on the down payment just to lower your monthly payment by a few bucks. You should also plan for costs such as the closing (typically ranging from 2 to 5 percent of the purchase price) as well as necessary repairs.

• Research mortgage financing options. Not every mortgage is created equal. Educate yourself on options before you get in too deep. Mistakes late in the game can be very costly. Most people are familiar with the standard 15- and 30-year fixed-rate mortgages. However, there are many other options worth considering.

• Invest in your equity. Home is more than a place to lay your head. It is an investment that will pay off in the future. Unlike rent payments, the equity you build in your home can be used as a down payment for your next home, remodeling, debt consolidation or a wild week in the Bahamas. As a homeowner, you have the pride of knowing that the house you live in belongs to you and you can do with it whatever you want. Knock out a few walls, paint the living room or throw a party. Now all you have to worry about is getting your house on the next episode of Trading Spaces.
Educate yourself about buying a house and the financing options that exist, and you’re bound to save money while living happily in your new home.

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