The American Dream.

Purchasing a home is probably one of the biggest financial decisions one will make in their life. It’s the American dream. So much more goes into it other than financial reasons. Are you ready to make that plunge? Not sure if you can afford to buy? Keep reading..

It’s more than just a pre-approval

So much more goes into purchasing a home other than the initial pre-approval. How do you know if you are ready to buy?

1. How is your credit? Ideally mortgage lenders like your credit to be 600 and above to qualify for a home. The higher your credit score, the better rate you should get, equally more money in your pocket in the long run.

What do you do if your credit is low/needs repaired? Everyone’s situation is different, if you only need to raise your credit a few points, it may be as simple as waiting a few months until that credit rises. If you need complete credit repair, it may be beneficial to hire a credit repair specialist (I have a great company I recommend to my clients!).

2. Are you out of debt? Make sure that you do not have an outstanding amount of debt, if you do I would recommend paying that down before looking into purchasing a home. It will be much harder to qualify if you have a higher debt to income ratio.

3. Do you have a stable job? Have you been employed consistently over the past few years? It will be difficult to get a mortgage if you do not have a consistent work history. Make sure to stay at your current job/have steady employment for at least two continuous years.

4. Are you planning on staying in the area for the next 2+ years? If not, buying is probably not the best option for you. The likely-hood you would get enough equity in the home to sell it without taking a loss is slim. If you travel quite a bit for work, it may not be beneficial to purchase a home either.

5. Are you ready for the responsibility of being a home owner? If something breaks, it is on you to fix. There is no landlord to call when your hot water heater takes a shit.

Now if you answered yes to any of the questions above, you may be ready to take the next step and talk with a mortgage lender. Using a good, QUALIFIED lender is key for your home buying success. Your lender should be able to explain the pro’s and con’s of your financial situation to you and give recommendations if you are not 100% ready to buy.

Pro’s to purchasing a home..

1. Freedom to do what you want with the property. Want to paint the door bumble bee yellow? Go for it. Want to put a privacy fence up? Check with the township, and go for it. Want to hang a picture and put a nail hole in the wall? No problem. Purchasing a home means you make the decisions. (Unless of course you live in a HOA).

2. You are building your wealth when you purchase a home. When you pay rent, you are building someone else’s wealth, you are helping your landlord build equity and pay off the home. Your money most likely will appreciate as well as real estate normally increases in value over time.

3. Low Interest Rates. Currently, rates are at a historical low. What does that mean for your mortgage payment? A 3% interest rates translates into a huge amount of savings vs. the 6% interest rate. The lower the rate, the lower your payment will be.

4. Often (not always) your monthly payment will be lower. Again, this will depend on each individual’s financial situation.

5. Tax Benefits. Did you know that you can deduct your state and local property taxes? Are you self-employed? If you are you can use your home office for a tax deduction. Talk with your accountant/whoever does your taxes to find out exactly what you are able to deduct.
   
   
   

   Is purchasing a home for you?

   You and only you can make that decision. It can be a scary process to go through alone, so make sure you are working with trusted professionals. Your lender and realtor should always have your best interest at heart, and now just trying to push you into a home. Speaking with a qualified lender will give you insight on how the finances will work, but ultimately it will come down to your comfort. Owning a home is a huge responsibility, but a very rewarding one. If you have questions about the process I highly urge you to reach out. It is never to early to prepare, even if you are thinking of buying in a year or two, now is definitely the time to start working towards that goal.