6 Questions To Ask Yourself Before Buying A House
Question: I’ve saved a down payment, narrowed my choices of neighborhoods, and drawn up a wishlist of what I’m looking for in a home, but I’m getting cold feet. How do I know if I’m ready to buy a house?
Answer: It’s perfectly normal to feel hesitant about going through with what may be the biggest purchase of your life. To help put you at ease, we’ve compiled six important questions to ask yourself before buying a new home.
1. Can I afford to buy a house?
Before viewing properties, remember that purchasing a new home will cost more than just the down payment. Buyers also need to cover closing costs, which typically run at 2-4 percent of the total purchase, as well as moving expenses, and possibly new furniture and renovations for their new home.
2. Can I afford the monthly mortgage payments?
Experts recommend having an expense range for the mortgage, utilities, and insurance of 25-35% of your take-home income. Before taking a step towards buying a house, take time to set a monthly budget and get a realistic view of what you can afford. Download our free budgeting worksheet here.
3. Am I ready to settle down?
The average length of time that homeowners in the U.S. live in a house is only seven years. Buyers who don’t plan on staying in their homes long-term may end up incurring a loss. Consider factors like your career, family planning, changing neighborhood demographics, and more when answering this question. Experts advise buyers to only purchase homes they plan on living in for a minimum of five years.
4. Does buying a house in my neighborhood make financial sense?
Many Americans view homeownership as a rite of passage into adulthood, but that doesn’t mean purchasing a home always makes financial sense. In some neighborhoods, rentals are relatively cheap, while houses sell for far more than they are worth. In these neighborhoods, buying a home may not be the logical choice. Understanding the value of homes in an area by reviewing the history of homes sold will help you make an informed decision.
5. Is my credit score high enough?
Homebuyers want as strong a credit score as possible to qualify for the best rate possible. If your credit score is low, try to plan 12-24 months out to ensure you have a solid history of on-time payments. Try to reduce revolving debt on credit cards and avoid having credit pulled for any other loans or credit cards near or during the home application, as that can impact debt-to-income and qualifying rates.
6. Do I have a plan in place for repairs?
When a renter has a leaky faucet, they call the landlord, and the problem becomes theirs. When a homeowner has a leaky faucet, it’s their problem. They can either fix it or hire someone to do the job. It’s a good idea to have a plan in place before the first thing in a new home needs fixing. If you’re handy enough to handle repairs on your own, you’ll need to be ready and willing to give up some of your free time on weekends to tend to things around the house. Sometimes, an appliance or a system in the home will be broken beyond repair and need replacing. Homeowners need to have enough money stashed away in their emergency fund or rainy-day account to cover these purchases, too.
Are You Ready To Buy A House?
Buying a first home is an exciting milestone that only happens once in a lifetime. If you think you’re ready to take this step, Members 1st offers a wide variety of home loan options. Apply online at https://www.m1cu.org/mortgages/ or contact our Loan Center at (530) 222-6060 ext. 516 to get started today!