Is it Time to Buy your First Home?
There are many factors that should be considered when making the decision to buy a home or continue to rent.
- Do you plan to stay in the area for at least 3 to 4 years? In most real estate markets it doesn’t make sense to buy a home that you will own for less than that. With the transaction costs of buying and selling you could lose money. If you stay less than 2 years, even if you make money, you will have to pay capital gains tax on any money that you make.
- What is the cost of renting vs. buying in your area? In some areas, owning a home costs little more than renting. Beyond your mortgage payment, you have to also consider the costs of home ownership. Taxes, assessments, utilities, lawn care, maintenance, cost of maintaining appliances and repairs.
- It’s all in your Budget! Before making the decision to buy a home, you must first look closely at your finances. Most lenders do not let you commit more than 28% of your gross income to the total of your mortgage, taxes and insurance. This combined with your total debt (cars, credit cards, student loans, etc.) not to exceed 36% of your gross earnings.
- The Money needed to buy a home. Besides your down payment, as little as 3.5% with an FHA loan, you will need money for inspections and closing costs. A whole house inspection averages around $300 in this area, with additional inspections, such as radon, termite and chimney the total is upwards of $500. There are also moving costs. Consider all of these costs when making your decision.
Click this link to use my mortgage calculator and to get more information on what you can afford.
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