As a realtor, people often ask me whether they should continue renting or step out and become a firsttime home buyer. This decision is not an easy one and there are many factors to consider. Before making a decision, I would ask myself these questions:
• Are you financial ready?
You will need to have a down payment. Although 20% of the purchase price is common, there are loans that you could possibly get at a lower percentage. It is best to factor in anywhere from 5-20%.
It is also important to keep in mind that, depending on the amount of your home, saving up to 20% could take quite a while, years even. While you are saving, home prices are quickly raising, along with interest rates. Buying now could save you in the long run.
• What is your credit score?
Your credit score can affect your interest rate, causing your mortgage to be higher. If your score is on the lower side, and you can make small adjustment to raise it, it may be best for you to wait and purchase a little later.
• How long are you planning on staying in the home?
If you are just moving to a new area for a short period of time, buying may not be best for you. You may not be able to recoup the money you put down on the house depending on the housing market in that area. It may be best for you to wait and get settled in an area that you know you will more than likely be living in for at least 5 years.
• Do you have extra money in your monthly budget for maintenance fees?
A lot of people forget that it does take money to own a home. There is not a maintenance man and a lot of times repairs come out of your own pocket, unless cover by the HOA. If you are in a townhome or condo, you are also responsible for monthly maintenance fees to the HOA for maintenance of the grounds, pool, etc. These costs and expenses would need to be figured into your monthly budget.
Once you have taken all these things into consideration, you can competently make your decision. Buying a home is a wonderful experience, but it should never be taken lightly nor should you purchase on a whim. You never want to be over your head or under water! Happy home buying!!!