Are you considering the leap into homeownership? Buying a new home can be a very rewarding experience, yet it’s important to make sure you’re ready to make this big commitment. If you feel prepared for the process but are still not completely sure, consider these factors before deciding to purchase a home.
1. Assess Your Finances
When you’re ready to buy a home, getting your finances in order is very important. First, determine if you can afford a down payment. Typically, 20 percent is recommended to avoid paying mortgage insurance and increase your chances of a good mortgage rate. While you can put down less money, this will increase your mortgage payments in the future.
You should also get pre-approved for a mortgage before starting the search for a home. This will give you a better idea of what you can afford and how your budget will look after you make the purchase.
Ask yourself, “Can I afford mortgage payments on top of my other expenses?” If the answer is no, it’s likely not the right time for a home purchase.
2. Evaluate Housing Market
It’s also smart to get a beat on the current housing market when starting a home search. If the market is hot with inventory, you may be able to get a better deal on a home you really like. If there is not much inventory, you may be competing with more buyers and could pay a higher price. In this case, you may need to wait a few months until the market turns around.
Another factor to consider is the time of year. You may want to purchase a home in the winter when there is typically less competition, or might prefer the springtime when home inventory often flourishes. These are important factors to look further into when deciding to move forward with the home buying process.
3. Are You Ready to Commit?
In considering your lifestyle needs, does buying a home make sense? If you have kids, they may need to switch school districts and make new friends. Perhaps the only homes available within your budget are too far away from your place of work or family members.
If you frequently travel or move around for work, buying a home might not be the best option right now. You may choose to rent if you’re unsure about putting down more permanent roots. Yet if you are ready to settle down and start the next chapter of life in a new place, buying could be a smart investment!
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