Published on December 08, 2015
Becoming the owner of a new home requires a few sacrifices, research, and the appropriate funds. With low mortgage rates available, it might be tempting to make the leap from renting to buying. However, before shopping for a new property, evaluate your current situation to determine whether homeownership is right for you.
Determine whether you want to remain stationary
According to Bankrate, before searching for a home you should ask yourself whether you plan to stay in the town or city you are looking. It might be tempting to buy a home when you see that your mortgage payments would be more affordable than the rent you're handing over to the landlord, but if you don't plan to stay, the savings won't be sufficient.
"When you buy a home, you should know you're going to stay for a minimum of five to seven years, and longer is better," said Ed Conarchy, a mortgage loan originator for Cherry Creek Mortgage Company, Bankrate reported. "If you try to do everything you need to do to make that house yours and then you turn around and sell it after three years, you're not going to break even and you're at risk of the market."
"Know you are going to stay for a minimum of five to seven years."
You have saved for a down payment
Buying a house requires a substantial sum of money up front. While there are opportunities to provide a smaller down payment through government-sponsored enterprises, such as Freddie Mac and Fannie Mae, having the money ready is critical. By supplying a down payment you are more likely to be approved for a home loan and qualify for a lower interest rate. In addition, the more money you can provide up front means there is a smaller chance of you needing to also purchase mortgage insurance, which can be expensive.
Yahoo Finance indicated you know you are ready to invest in a home if you've already done the work to save for this substantial investment.
In addition to the money necessary for a down payment, you will also need to allot funds for maintenance.
Make sure you have the financial capacity to pay for any projects or emergencies that pop up during homeownership. Replacing water heaters, hiring pest control and calling the plumber require quite a bit of money. Don't forget to have a healthy nest egg established prior to investing in a new home.
Realistic expectations necessary
First-time homebuyers may have a dream home in mind that they are ready to purchase. However, it's important to realize perfection is not always the result when hunting for a house. Available inventory, budget constraints and the current market impact the results of your search for the perfect home.
Partner with a real estate professional to discuss what is currently available and what to expect prior to starting the homebuying journey.