The American dream is to settle down, raise a family and own a home. Married or single everyone wants to eventually own their own home. It gives you a sense of pride and accomplishment. It is a great goal to work towards and there are some benefits to owning a home such as tax savings and building equity in your home. Understanding the buying process and doing a little soul searching will help you to determine if buying a house is right for you. If it is not, it will give you a better idea for when the time will be right for you.
Is everyone on board? If you are not doing this alone, you will need to find out if this is a common goal for you and your significant other. If only one of you is ready to take the plunge, then you are going to have a hard time purchasing a home together. Purchasing a home requires all parties to bring forth your personal and financial information to the table. This is information that is best to know now rather than later. You do not want to wait to find this out after you have found the house of your dreams. You want to have this information available and ready so that you will be ready to make the next step.
Can you afford the down payment? Most loans require a 20% down payment. On a $300,000 dollar house, that is $60,000. That may be a huge amount of money to you and could wipe out most, if not all of your savings. You should always keep a safety net just incase you or your spouse lose their job or if for an unforeseen emergency such as medical care.
Can you afford the closing costs? Are you ready to plunk down the costs to close the deal? Your closing costs could be in the thousands especially if your lender requires you to pay points, service fees and additional charges. These costs all add up. Know these figures before you sign on the dotted line. You may find yourself backing out of the deal on your closing day. That is sad to say but it happens.
What are your plans after moving in? Can you afford to remodel or decorate your new home? If it’s a fixer upper, you will need to factor in the costs to repair or renovate your new home. For older homes you will want to set aside money for unexpected repairs. Do you have plans to decorate? You may find yourself disappointed to find that your passersby can see inside your home because you cannot afford the curtains for the windows.
That should give you enough food for thought to make your decision into home ownership. Make the right decision by educating yourself. There are some great books to help guide you through the process. Now you can move on to part two were we will further analyze the cost of your next home.