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Financial Security is the Key to Owning a Home

By
Real Estate Sales Representative with Edina Realty

Nearly everyone wants to have a part of the American dream by owning their own home. Whether that home is a sprawling ranch in the country, a bungalow in the suburbs, or a condo in the city, it’s a dream that most of us share. For many that dream has already come true, and is just a fact of life. For many others the dream of home ownership seems too far away to reach.

The usual reason, in their mind, is affordability. But what is really keeping them from owning their own home? It’s usually got more to do with their personal finances than the cost of the home.

Mismanagement of finances over a long period of time causes two of the biggest factors in home buying to become seemingly impossible hurdles—credit history and down payment.

We have all heard about, and probably experienced or seen first-hand, the effects that overwhelming debt can have on a home owner, or anyone else for that matter, when an unexpected loss of income occurs. Whether that loss was from the death of a spouse, a serious illness or injury, or loss of a job; the effects on a family’s finances can be the same.

Foreclosure, repossessions, tax liens, judgments, garnishments, and sometimes bankruptcy can all happen when the debt-to-income ratio suddenly hits an unmanageable high. We have even heard increasing stories of formerly successful people ending up homeless due to a combination of job loss and un-payable debt.

For those who have the dream of owning their own home, these types of problems can seem impossible to overcome to reach that end. The only way to get there is to start at the beginning. Pay off your debt in small steps, get caught up on past payments, and start saving for the future.

Many advice givers are out there, some good like Dave Ramsey and Suze Orman, and some not so good, even occasionally the financial organizations themselves, but one thing that is common between them all is the need for financial stability.

Financial stability is usually found by having little or no debt prior to obtaining a home mortgage and by having significant savings and investments. Not only should you have enough savings for a hefty down payment, but you should have enough additional savings to see you through at least 6 months of full expenses should the unexpected happen.

How much of a down payment should you have? The more the better. Many banks require at least 10% down, even the FHA is ready to raise the minimum to 5%, but most financial advisers recommend at least 20% down. However the simple fact is, the more down payment you have the more house you can get and/or the lower your monthly payments will be.

Lower monthly payments and higher savings mean less of a chance that a job loss will bring you to the point of foreclosure on your home. Whether you want to grow old in your home, eventually seeing a paid off mortgage, or if you plan to sell it in a few years and move up or down, the more equity you have the more stable your life will be and the more security you will have in the biggest investment you will ever make.

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Looking for a home in Edina, Minnesota? Contact me, Kim Melin, today.

Check out my website for help in buying a home in the Minneapolis area. 

 

Posted by

Kim Melin

Real Estate Advisor/Edina Realty

952-201-4758

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