When should you consider buying a home

When Should You Consider Buying a Home

Buying a home may sound like a great idea. The idea of owning property is indeed the all-American dream, but is it your dream and is the time right for you to proceed? You can do a quick check list to see if waiting might be more beneficial or if the right time is now for home ownership. Remember, not everyone SHOULD own a home, even if almost everyone wants to own one.

1 Is home ownership really what you want?

Home ownership means having something special you can decorate as you please, have guests visit---even for weeks—without having to notify anyone and growing your own equity rather than paying for the landlord's equity. This isn't a complete list of benefits, just a short list that normally first come to mind. No matter how long that list is, however, there are other things to consider such as the difficulty if you relocate or all the extra work.

2 Are you budget ready?

The dream can be crushed if your budget tells you owning a home just isn't possible. Even with the lowest possible down payment, it can costs thousands of dollars to purchase a new home. If you choose the rent-to-own option, you may be paying far too much for a house or end up finding the terms of the sale are actually far different than you thought. There are also other, sometimes unexpected, costs.

Besides taxes and insurance sometimes things just break and often not at opportune times. The coldest night of the year the furnace might die or the massive waterfall develops and drains through the living room ceiling from the broken pipes in the bathroom. You'll be far ahead of the game if you identify all the things you don't know how to do and save for unexpected expenses. You can also start learning how to do things in a home by helping people who know how to fix things, watching videos, getting books and reading articles on the subject.

3 Are you credit worthy?

Your credit history will determine whether you can get a home and how much it will cost in interest. On a $100,000 home, every percentage point increase costs $1,000 more in interest the first year, raises your payment or increases the number of years to pay off the loan. Taking the time to clean up your credit pays you thousands of dollars in the long run and may not take that long.

4 Do you have a down payment?

PMI---private mortgage insurance--- is not homeowner's insurance that pays you if something happens to your home, it's for the lenders benefit in the event you default on loan payments. PMI insurance comes into play when your down payment is less than 20 percent. It can be as much as a half percent to a full percentage of the loan each year. On a $100,000 loan, that would be anywhere from $500 to $1000 and make a difference in your payment between $42 a month and $83+ per month in payment cost with no extra benefit to you. Be sure to include other costs of closing when you're calculating how much you need.

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