Your readiness to buy a home depends on a number of complicated factors. Here are some important considerations you should way before you decide to take this enormous step.
Financial Matters
Few people can afford to pay for a home purchase with cash. Most people have to take out a mortgage loan. Banks want to make sure that they are loaning out money to people who are likely to pay it back. They look at multiple complex financial factors to make this determination:
- Credit score
- Income
- Debt
- Savings
Lenders do not only look at each factor individually. They also look at the relationships between them, such as debt-to-income ratio. It can be difficult for you to do these calculations yourself, so it may help to use a mortgage qualification calculator. Just keep in mind that you may qualify for a higher mortgage than you can afford, so you should not take out a bigger loan than you need if indeed to decide to buy a house.
Job Security
There is no worse feeling than to purchase a house you love only to end up struggling to keep up with the mortgage payments because you've lost your job. At that point, the house can feel like a heavy burden, a trap from which you cannot extricate yourself without causing injury. Sometimes job loss happens without warning, but if you have reason to believe that your position could be in jeopardy, hold off on purchasing a house until you feel that your situation is more stable.
Life Goals
Can you see yourself living in this location for years to come? Are you ready to put down roots? If you think that you may have to move in the near future because of a job or other commitments, it may not be worth it to purchase a home right now. On the other hand, if you've decided that you'd like to stay in your location permanently and have the means to do so, it may be appropriate to purchase a home.
The longer you stay in a home, the more equity you build in it. That plus rising property values should allow you to make a profit from the sale of your home if and when you decide to move. However, you would have to stay for a number of years to make it worthwhile to sell.
Interest Rates
Interest rates for mortgage loans fluctuate periodically. You want the lowest rate possible because what seems like a relatively incremental increase of a percentage point or less could cost you thousands of dollars more over the life of your loan. Interest rates can change without warning, and the rate you qualified for upon preapproval may not be available when you are ready to borrow. This should not cause you to rush into a decision, but it is something to keep in mind when you are making your decision.
Housing Market
The market favors buyers when there is enough inventory available that supply outstrips demand. If you wait until a buyer's market, you may be able to negotiate a better purchase price or terms that are more favorable to you. On the other hand, you may have to wait a long time before market trends shift.
Buying a home can be a rewarding investment. However, buying a house at the wrong time could have long-lasting, unforeseen consequences.
- Read more...
- 0 comments
- 161 views