Your Finances, Your Future - Buying a Home

Buying a home is generally the biggest purchase a person will ever make. To determine if you are ready for homeownership, consider your current financial situation, future plans and your ability to manage the costs of homeownership over the long-term.

Fortunately, there are many options to assist future home owners, from choosing a home-buying program, to shopping for a loan and picking out the perfect house. The key is to stay within your means. Do not buy outside of your price range, and be realistic about your current and future expenses and earnings. Falling in love with the perfect house, neighborhood, or features can cause serious problems and financial stress down the road if it is outside your price range or you have to struggle to keep up with maintenance costs.

TIPS:

• Understand the benefits and costs. Overall, homeownership is a good investment for most people, but there are risks. If you understand the benefits and risks of homeownership, you can best determine whether it’s a good time for you to buy a house;
• Find the best loan option. Shopping around for a home loan or mortgage will help you get the best financing deal to suit your needs. Should you gamble with an adjustable rate mortgage, or is a fixed-rate better for you? Should you finance your loan over 15 years, or is a 30-year mortgage more appropriate for you? Shopping, comparing, and negotiating can save you thousands of dollars;
• Follow through. Once you have an accepted offer, communicate with your agent, get your home inspection done, purchase your homeowner’s insurance, and read everything carefully and thoroughly. You don’t want to take the chance of losing your dream home because you didn’t do the work necessary to close the deal. 

TOOLS:

• Decide how much home you can afford. You can estimate how much you can afford to spend on a house by entering your income and credit card, car and other expenses online;
• Cut through the complexity. Buying a house can be complicated, but there are tools to simplify the process. Learn more about nine steps to buying a home;
• Learn about mortgage options. Adjustable rate mortgages mean they can be adjusted, and your monthly payments may change. You could end up owing more money than you borrowed, or paying penalties for paying off your mortgage early. Get the facts;
• Understand the risks of homeownership. Meeting the monthly mortgage payment is just the start. Owning a home means you are the landlord in charge of repairs and home maintenance. If your situation changes, and you need to downsize, selling a home likely will take more time than moving out of a rental unit. Learn more about preparation for home ownership and related issues.

TRAPS:

• Deceptive mortgage ads. Advertisements for low mortgage rates may look inviting, but beware: they may not include all of the costs, including the annual percentage rate, points or fees.