Should I Buy A Home?

Everyone is doing it! Your parents, your friends, your co-workers...so how do you know if time is right for you to buy a home? That question can only be answered by you. And the decision to purchase a new home should be based on both your finances and your personal situation. Here are six questions to consider when determining if you are ready to make a move to become homeowner.

1. Home Much Home Can I afford?

Homeownership is more than paying a mortgage. Proper planning will help you avoid being “house poor”, meaning that once you pay the mortgage there are few funds available for other things. Make sure that you properly budget for homeowner’s insurance, utilities and property taxes, and don’t forget maintenance costs and if applicable, a homeowner or condo association fees. Proper budgeting will help you manage your finances and help you understand what level of purchase price that you can afford to pay for a new home.

2. Do I have any credit concerns?

Everyone has a credit score, also known as a FICO score (Fair Isaac & Company), which can range from 300 to 850. If your credit score is below 660, there will be more hoops to jump through to qualify for a mortgage. Often, a higher down payment and/or higher interest rate will be required. If your credit score is on the low end of the range, you will want to work with a mortgage consultant to repair your credit and raise your credit score.

3. How much down payment do I need?

Many borrowers will use an FHA Insured Loan (insured by the Federal Housing Administration). Part of the requirement for FHA eligibility is the borrower contributing a down payment of 3.5% to the purchase. Currently, the median sale price for homes in the Upper Marlboro, MD is approximately $370,000, which means that you would need $12,950 as a down payment. There are also the options of VA Loans (insured by the Veteran Affairs Administration), if you have ever served in the US Armed Services, and Conventional Loans, which consist of all other loans that are not FHA or VA loans. VA loans do not require a down payment, where Conventional Loans can require down payments as high as twenty percent (20%). You can see why it is so important to speak with a lending consultant to determine which product best suits you situation.

4. How secure is my income?

Your loan officer will work to ensure that you have a reliable source of income. If you are thinking of leaving your current job or if there are rumors a ‘corporate downsizing’ (meaning a pink slip could be in your future), how will you pay your mortgage if it happens? Make sure you think ahead for these types of scenarios. Although some things may not be in your control, planning for them is completely within your control.

5. Can I handle maintenance and repairs?

Owning a home means maintenance, such as mowing the lawn or making minor repairs. It all comes down to time vs money. Do you have the time, skills and interest to maintain the property? Or, can you afford to hire someone to handle these tasks for you? 

Summary

Ultimately, once you have examined your finances and have made the decision to purchase a new home, take the time to choose your advisers wisely and enjoy the process!