Buying a home is a huge step, especially for those who have never been home owners. Home ownership comes with numerous concerns, such as paying additional utility bills and performing home maintenance. However, the benefits can also be huge, such as knowing that personal changes can be made to the home and building equity for future financial security. These four tips will help individuals know whether they are ready to make this life-changing leap.
Debt Is Paid Off
Individuals should have all debts, including car loans and credit cards, paid off before signing for a mortgage. Not only will this give them additional peace of mind, but also it will significantly free up their finances for their mortgage payments. Moreover, it will give them leeway should they discover costly repairs that they need to make around the house.
Savings Are In Place For The Down Payment
Not only should debt be paid off, but also renters should have enough in their savings accounts to make a down payment of at least 10%. However, a 20% down payment is preferable. Individuals are advised to stay away from the no-down-payment option because of the high interest rates and huge mortgage payments that are typically included in these plans.
Rent Is High
Sometimes, it can actually be more cost-effective to purchase a home rather than to continue paying on a rental. In some areas of the country, rental units are in such high demand that landlords can charge premiums. When individuals see rents going up and prices on homes going down, they will know that it is prime home-buying season.
A Home Is Priced To Sell
If one’s family is expanding and individuals know what they will be needing from a home for the next ten years, they may be ready to make this investment. According to The Clement Group at RE/MAX Properties, Inc., individuals will know that homeowners are motivated to sell when they have made necessary repairs before putting the house on the market and when the homes are priced to sell with competitive prices throughout the neighborhood.
Each of these four tips should be in place before one commits to buying a home. Home ownership comes with major financial obligations and individuals should feel that they are financially stable before signing the paperwork. Checking with professionals, such as one’s personal accountant, a real estate agent and a mortgage lender, can help interested people cement their decision to buy.
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