Since the foreclosure crisis began, many Americans have been thinking a little bit more critically about whether they are truly ready for home ownership.
How do you know if you’re ready to own a home? Here are a few questions to ask yourself as you consider buying your first home.
Can you pay for it?
You might think this question is self-evident, but deciding whether you can pay for a home involves more than being able to afford the sticker price. For an idea on what your monthly mortgage payments would be on homes in different price ranges, use an online mortgage payment calculator like the one offered at www.mortgagecalculator.org. Keep in mind that such programs only give an estimate of what you can expect to pay and don’t include all homeowner expenses.
Can you get a favorable loan?
If you have a good credit history, chances are you can qualify for a loan with a lower interest rate and more favorable repayment structure. If you are considering buying a home, review your credit report and make sure there aren’t any undeserved blemishes. Work to bring your credit to the highest rating possible before applying for a home loan.
Take the time to educate yourself about the different types of loans available and beware of any mortgage that carries an adjustable rate, as this could cause your payments to balloon when you don’t expect it.
Are you ready to maintain a home?
When you’re renting, any problem with your property ideally is taken care of with a call to the landlord. When you own your home, that burden falls on you. Make sure you have the time and money to deal with household fixes, as letting your house deteriorate can severely affect the value of your property, not to mention your standard of living.
What’s the market like in your neighborhood?
While a buyer’s market exists at the moment in many U.S. cities, conditions vary from place to place. Compare what you would pay renting to what you would pay on a mortgage for a similar space. If mortgage payments would be considerably less than monthly payments on a lease, chances are the market is good for home buyers.
Do you plan on staying for a while?
If the housing crisis has taught us anything, it’s that buying a home isn’t the sure-fire investment it once was. During the housing boom, owning a home was considered as much an investment strategy as having a place to call your own. If you only plan on staying in a home for a limited period of time, you face the risk of not getting the value of what you paid for the home – a position you don’t want to find yourself in.
As many in the country have learned, home ownership is a long-term investment not to be taken lightly. But if you find yourself in a solid position to buy, now may be the perfect time to make your dream of home ownership come true.
