Are you interested in buying your own home, or just curious about how it all works? Buying a home is a rather large life event, and planning is a great idea. Have you tried to explore what it takes to buy a house yet? Whether you have or you haven’t this article will probably be informative for whether or not you should be readying yourself to buy a home. I take a lot of pride in advocating for my clients, and for being as transparent with them as possible.
If you are scared of buying a home you should ask a Realtor to explain to you step-by-step how this whole thing works as if you were a 6 year old, and after that conversation you should have a pretty good idea of who you’re working with, and what you’re getting yourself into.
You won’t understand every little detail perhaps, but you can at least have a plan so you can start having an idea of what you’re up against. If you are seriously considering buying a home soon now is a good time to start getting your ducks in a row, because over the next few months the market will be speeding up, and houses will come and go much quicker than they have over the last 5 or 6 months (it happens every year). I encourage you to read this article, and I also encourage you to click on the link at the top of this page that says “Buying A House 101“. I say this to the people that I work with pretty regularly, but I believe that buying or fixing up a house can’t fix all of your problems, but it can serve as a great reset button to start living differently. I hope you have a wonderful day my friends!
Are You Ready to Buy a Home?
While it may be acceptable to snap up a pair of shoes on an impulse, the choice to buy a home requires thoughtful planning and decision making.
Whether you’re becoming a homeowner for the first time or you’re a repeat buyer, buying a home is a financial and emotional decision that requires the experience and support of a team of reliable professionals including a REALTOR®, a lender, a lawyer and a range of other individuals.
Why Do You Want to Buy a Home?
The emotional part of the decision comes into play when you think about why you want to move. If you’re a first-time buyer, you need stability in your career and the desire to commit to living in the same community for five to seven years. You should want to establish roots in a neighborhood and look forward to decorating as you please without requiring a landlord’s permission.
Purchasing a home is a lifestyle choice that requires you to think about how you like to spend your time and the type of community where you want to live—such as a rural area without nearby neighbors, a high-rise building in a city or a home within a planned community with recreational amenities.
The more you understand your priorities for a home, the easier it will be for you to narrow your real estate decisions.
Homeownership can also be a powerful way to increase your personal wealth for you and your family, since you’ll be building equity in your home as you pay off your mortgage.
Are Your Finances Ready for Homeownership?
While your dream home may not be within your reach right away, you can take steps to become a homeowner the moment you earn your first paycheck.
In order to qualify for a mortgage to buy a home, you’ll need good credit, a pattern of paying your bills on time while still saving money and a maximum debt-to-income ratio—your gross monthly income compared to the minimum payments on all recurring debts—of 43% or less. Some lenders have stricter guidelines, so the lower your debt-to-income ratio, the better your chances of a loan approval.
While loan programs are available with low down payments of 3.5% to 5%—and a few programs offer no down payment at all—you’ll still need some savings to pay for closing costs, moving expenses and an earnest money deposit on a home. It also is very wise to have cash reserves on hand after you buy.
Housing prices and rents vary from one location to another, but you can use realtor.com®’s Rent vs. Buy calculator to estimate the difference between your current rent and buying a home. In some markets, buying a home can cost the same or even less than renting.
In addition, you should think about your plans for the future and how you spend your money—along with your comfort level with a mortgage payment. A lender will tell you how much you can borrow, but that lender won’t know how much you spend on travel or golf or your plans for potentially reducing your work hours when you have a family.
Once you’ve thought through the emotional and financial aspects of becoming a homeowner, your next steps should be to find a reliable, experienced REALTOR® to become your partner in the home-buying process and to meet with a reputable lender who can discuss your options for financing your purchase.