How To Tell If Youre Ready To Buy A Home
How to Tell If You're Ready to Buy a Home
Is it time to buy a home? Buying a home is a big decision that shouldn't be taken lightly. Here are some ways to determine if you're ready to buy.
How do you know when it's the right time to buy a home? Many people ask themselves this question, while others jump into buying a home without carefully considering what all it entails.
Here are three questions that buyers should ask themselves to determine if they're really ready to buy.
Are you planning to stay in a home for at least three years?
Do you really want to purchase a home?
Will it cost the same or less compared to your current living situation?
Are You Planning to be in the Home for at Least Three Years
Because of the closing costs incurred, the hassle and expense of moving, possible taxes you have to pay on profits when you resell and a slew of other reasons it's best to buy when you know you'll be in a house at least three years.
This will also give you enough time to see real appreciation in the property. Most real estate markets appreciate over time. The longer you're in a home the more potential you'll have of making money on a resell, money that can be used as a down payment on another home.
Do You Really Want to Purchase a Home
What is your motivation to buy? Do you want a place you know is your own? Are you starting a family and like the stability of homeownership? Are you wanting to make money? Do you think it's time because friends, family and colleagues already own homes?
Homeownership comes with a lot of responsibilities. Taxes, insurance, lawn care and repairs are just a few. If you live in an HOA you have additional requirements and responsibilities to stay in good standing.
There is also a lot of financial responsibility. Managing a mortgage is a serious undertaking that has quite an impact on your credit, both positively and negatively. If managed incorrectly, late payments, liens or a foreclosure can bring your score down for years. As you probably know your credit score affects all aspects of your life, not just your ability to get a mortgage.
Buying a home works best when you really want to do it for the right reasons which aren't based solely on making money or trying to 'keep up with the Jones'".
Will it Cost the Same or Less Than What You Pay for Housing Now
A home is an investment that will help you build your assets but there will be expenses up front and along the way. Some of these include:
Repairs and maintenance
For the most part, this money is going towards something you own and can resell, hopefully for a profit. If you're renting it is likely going to pay off someone else's mortgage.
Before you begin the buying process, you need to sit down and figure out if buying vs. renting is a good financial decision. Look beyond the monthly payments and consider what it costs to obtain a mortgage and manage a home as well as how this investment may pay off in the future.
Don't forget the tax factor. Homeowners get the advantage of being able to write off the interest they pay on their mortgages. This can mean receiving thousands of dollars in a tax refund, especially in the first few years when you're mainly paying interest on your mortgage.
Next Steps Before Your Home Search Begins
Think you're ready to buy a home? If so, it's important to prepare and take the right steps to make the process a success. Before you begin searching for homes you'll want to:
Get Your Paperwork in Order
Tax Returns (at least one year, if self-employed or paid by commission typically last 2 years)
W2s (typically last 2 years)
Pay Stubs (typically the last two with year to date earnings included)
Bank Statements (typically last 2 months)
Investment Account Statements
Copy of Your Driver's License or Photo ID
Your credit report is the first document you should obtain before you even approach a lender. The reason being, if there are any mistakes you can get them taken care of before a lender starts analyzing your credit score.
Beyond documentation you'll also have to provide a lot of information. Typically a lender will want the name, address and contact information for any individual or business that manages any of your debt and/or assets.
Get Pre-Approved for a Loan
Today, mortgage pre-approval is more important than ever and harder to get. Talk to a couple of reputable, local lenders and see which mortgage is best for you. Your Realtor can assist you with the right mortgage broker.
Find the Right Real Estate Agent
Seeing as there are hundreds of thousands of people who have a real estate license, you're likely to have a number of professionals in your area to choose from. However, the skill, knowledge and experience of agents varies greatly. Some are full-time professionals, some are part-time and some are actually employed in other industries.
The first step is to find local real estate agents. The internet is a great place to startt your search. There you will find agent profiles that list experience, education, certifications earned, market areas served and more. It's also a good idea to get recommendations from friends, family and colleagues who have bought a home in your area.
Questions to ask Real Estate Agents
It's best to interview several real estate agents before deciding which one you want to work with. The process can take months so you'll want to make sure it's someone you're comfortable with and who's company you'll enjoy. Below are some questions to ask during your interviews.
I also suggest that buyers ask:
What are your policies on us calling you after hours?
What percentage of your business is geared toward working with only buyers?
What's the most important thing that a buyer should be aware of in this market right now?
If you are considering a home purchase on the Treasure Coast, then now is the time to get started. Call me for first class real estate service!
About the author: Richard L McKinney - Realtor, Local Real Estate Expert & Nice Guy
I’d love to hear from you. What do you think about this topic?
Richard L. McKinney P.A.
Atlantic Shores Realty Executives
Selling the Treasure Coast - Port St Lucie, Fort Pierce, Stuart, Jensen Beach, Palm City and Hutchinson Island --- Homes, Condos, Townhomes & Land.
Sell Phone: (772) 370-8631
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My goal is to be your Realtor for LIFE. If you or someone you know has a real estate question, purchase or
Author: Richard McKinney
June 3rd 2015
About Richard: I have been selling real estate in South Florida since 1998 with a specialization in homes, town hom...