5 Questions To Ask Yourself Before Buying A Home
1-Do I Know How to Budget My Money?
Creating and sticking to a budget is showing financial responsibility. Know what your limit of spending is and stick to it. With a budget you know where your money is going every month.
2-How Much Down Payment and Closing Cost Money Do I Need?
The more money you have for a down payment the more equity you will have in the home. Not every loan program requires you to put money down but you need to at least have money for closing cost expense. Depending on the price of the home will determine how much cash is needed.
3- Do You Have Stable Income?
You’ve been on your job for a while and feel stable. You know at the current pay scale how much you feel comfortable spending. Do consider any life changes events that could occur; advance education, family size change? Consider what life will be in 3, 5 or even 10 years.
4- Your Credit Score?
The higher the credits score the better chance you will have on getting a loan. The higher the credit score can usually afford you a better interest rate. Keep in mind that different loan programs have different minimum credit scores requirements. To find out what your credit score is go too www.AnnualCreditReport.com. Here you can pull your credit report from the top three credit reporting agencies. I recommend only pulling from one agency and check it again using a different agent in four months.
5- Do You Have Reserve Funds
Most lenders want to see that you have at least 2 months of reserve funds in the bank. To find out how much money you will need to have in your reserves funds-take the monthly estimated mortgage payment, estimated utility cost and any recurring debt you have and multiple by two. Keep in mind that the reserve fund is above and beyond what you need for a down payment and closing cost.
Owning your own home can be very rewarding. Make sure you are prepared. Owning a home should not be a snap decision. Take your time as you got through the process; you will be glad you did.