Are You Ready For Home Ownership?
So, you’ve decided that it’s finally time to purchase your first home in Bloomington – how exciting! Be forewarned, however, that the temptation to hop into the car or on the Internet to start shopping for homes is a dangerous one.
House hunting comes later in the process. So, remind yourself to be patient and to take the steps to successful home buying, in order.
The first of these steps requires a bit of introspection. Are you ready – both financially and emotionally -- to own a home?
Financial readiness includes the following:
- Two years in your current line of work with the ability to verify your income.
- A decent credit history that proves you pay your bills.
- Sufficient income to cover all the costs associated with home ownership and still pay your other debts.
- Verifiable down payment and closing cost funds.
Understand the Benefits and Risks of Home Ownership
There are many benefits to home ownership and chief among them are the tax advantages. If you have questions about these advantages, speak with your financial advisor. Additional benefits include:
- A monthly housing payment that won’t increase like rent may (if you choose a fixed-rate mortgage).
- The ability to build equity. This doesn’t happen when you rent.
- Pride of ownership and a sense of belonging to a community come with owning your home.
What are the Risks of Homeownership?
Like all investments, owning real estate comes with certain risks. Some of these include:
- Higher monthly housing payment. Depending on interest rates and the current market, your mortgage payments may exceed what you previously paid in rent, putting a strain on your finances. Keep in mind, however, that the higher monthly payments may be offset by the tax benefits.
- Loss of equity. We can all remember the massive amount of household wealth lost during the last recession. Of course, now, homeowners have mostly regained what they lost but it was a terrifying time for them.
- Repairs and maintenance. Without a landlord the cost of repairs and maintenance will be up to you. Is this something you’re able to effectively budget for and afford? Financial experts recommend that you have a savings cushion, equal to at least 1 percent of the purchase price of the home, set aside for maintenance needs.
How much House can you Afford?
The answer to this question can only be learned when you consult with a lender. Don’t make the rookie mistake of looking at homes first and then seeing a lender. The chances are good that the homes you see are out of your price range, setting you up for disappointment when you start looking at homes you can afford.
Another good reason to see a lender first is because savvy home sellers won’t entertain offers from non-preapproved buyers. If the market is fast-moving, you may lose the home of your dreams by skipping the preapproval process. Ask your lender for a letter of loan preapproval.
Finally, without knowing how much you can spend on a home, you’re wasting your time, your agent’s time and the seller’s time.
Team Lindahl Can Help
If you’re ready for home ownership, you’ve come to the right place. The Kris Lindahl Team with Kris Lindahl Real Estate is ready to help you every step of the way down the road to owning a Bloomington home.
Our commitment to our clients is steadfast: We will find you the right home at the right price. We can also assist you in finding down payment assistance programs and we offer financial rewards to clients in certain professions.
Don't hesitate to contact us to find out more about how we can make buying your first Bloomington home easy.