FORUM Credit Union's website works best with JavaScript enabled

Are you ready to buy a house?

Buying your first house is a big step and often times, people don’t find out if they are really ready to own a home before embarking on the process.  Being ready is about being financially and emotionally prepared to buy and own a home. 
 
What are some of the financial readiness indicators?
The first one is having 5 to 10% for a down payment and even though you can buy a house with less of a down payment, it is really best if you wait until you have at least 5%.
 
The second financial indicator is your level of other debt.  It is recommended that other debt be less than 15 – 20% of your income because your housing expenses will be about 20% and it is best to keep all debt payments within a 35 – 40% of your total income.
 
What are other financial readiness indicators?
First is your job stability.  Make sure you will have a reliable source of income that you feel reasonably certain will continue.  If you are married, don’t buy a home that requires both incomes if one might be changing within in the next 2 – 3 years because of children.
 
Secondly, have a solid credit score.  The best loan rates are for those having a better credit score.  And if your score is too low, getting a home loan will be very difficult.  If your score is low, working on improving your score before buying a home might be helpful.
 
What are non-financial signs to consider?
First, are you ready to stay put for 5 – 7 years.  You need that amount of time to ensure your best chance of not taking a loss on your home when you sell it.  If your time horizon is shorter, you might want to continue to rent.
 
A second consideration is your desire to take care of a home.  You won’t have a landlord to call when the sink is clogged.  And, it’s  not just the financial part of care and maintenance of a home. It is also the responsibility of taking care of your new home by doing regular maintenance, mowing the lawn, and all the other things that go with homeownership.
 
The most overlooked part of buying a home for a first time homebuyer?
Considering what their family situation might be in the next 5 – 7 years is what most first time home buyers don’t consider.  Singles often don’t plan for marriage and couples with now children to think about having kids when buying a home.  As we mentioned before, the longer you stay in your first home, the better financially it might be for you. 
 
If you have passed the first time home buyer readiness test, then the next step is to get pre-approved for a mortgage and start talking to a realtor to find your dream home.


Posted: 2/3/2014 with 1 comments

Categories: Homeownership, Money Matters



Comments
Leave comment Subscribe



 Security code
Cody Ferguson
Another key area to look at in regards to maintain your new home revolves around financial aspect of the maintenance as well as the effort. This like the cost of mulch, grass seed, savings for a new appliance or windows, painting as they come up are essential. If you live in a neighborhood with an HOA you will be expected to pay to keep your house up to par so factor that into your home decision.
3/10/2014 at 4:29 PM

NCUAEqual Housing Opportunity
Federally Insured by NCUA