Congratulations! You are about to take a step closer to having your own home!
This could be the biggest life decision you’ll ever make. Sure, the joy of having to drive into your own garage and just enjoying the perks of your own private haven gets the hype up. Now that you’re so driven to make that vision real, you’re ready to jump right into the deep unknown called “homeownership”.
Hold your horses! Before you begin, work on your plans and know a little more about home purchase. Here’s a rundown of the factors you need to consider before finally buying a residential property.
✓ 1. Set a Realistic Budget
There are a lot of beautiful homes out there. But instead of looking for a home first then squeezing out every penny from your bank account just to try to afford it, try doing it the other way around. Set a realistic budget that you know you can afford over the life of the mortgage. Then find a home that suits your taste and style that’s within the budget you set. For sure you’ll find just the right home you’ll fall in love with.
✓ 2. Examine Your Life Situation
Are you still paying off a large debt? Are you planning to tie the knot soon? Are you currently self-employed? Where you are right now and how you see yourself in the near future can play a big role that can affect your home buying journey.
If you’re getting married real soon, you might as well evaluate if you have enough finances left to pay for the property. A wedding can cut off a big slice from your bank account, a home purchase can do the same. Getting a loan for a house may mean that you have upfront and monthly changes.
If you’re self-employed and thinking of buying a home, you may have more difficulties getting qualified for a loan. Gladly, FHA has loans for you. Having a stable income and a good credit report can get you qualified for an FHA home loan.
Bottomline, Know your priorities and financial assets to help you decide if you should buy a house now.
✓ 3. How stable is your income?
Are you new to your job? Or is your business income projection over the next months showing some promise?
Home loans typically need you to be in the same job within the last 30 days, at the very least. FHA, on the other hand, does not require a minimum length of time that you have been employed for the same position. A verification, however, is required for the most recent two years of your employment. Any significant gaps and unusualities, you will be asked to explain to help them determine if you are eligible.
Check to see if your income can support the foreseen monthly payments for the home you are about to buy. If your income is just enough for your current recurring monthly expenses you many not have enough to afford a home just yet. Evaluate your financial capacity; decide whether you need the home now or you should save up for it beforehand.
✓ 4. Staying or Selling
There’s a question on buying as opposed to renting — Which costs me more? One thing to consider as to what’s best is knowing how long you are planning to stay in the home.
If you are thinking of buying a temporary home now and selling it to buy a better one in a year or two, it wouldn’t be a practical move. Even if you resell the home, you may not be able to recuperate with the home purchase expenses that soon. Remember that aside from the down payment and monthly rates you pay, there may be insurances, closing costs and other charges on top of it. That and you’d have to maintain the home at a reasonably resellable state.
Renting a place and saving up for enough reserves to buy the actual home you want would be a better path to take.
✓ 5. Look for the Best Financing Options
Look for a home purchase loan that suits you. You can definitely ask different lenders for the rates, down payments, terms and conditions of a loan. In an FHA loan, eligible homebuyers may be qualified for a very low down payment.
Also, with FHA, there are approved housing counselors who can give you sound advice on buying a home. A list of Approved Housing Counseling Agencies is found on the U.S. Department of Department of Housing and Urban Development website.
A home purchase can be a momentous moment in a person’s life. Make it worthwhile and make it work. Now, with this in mind, you can make better choices and create a better plan towards homeownership.