The prospect of buying one’s first home is thrilling and a bit daunting. Choosing to take the plunge into full-fledged home ownership is something that no one should ever take lightly. As the largest single investment that any couple or individual will ever make, it is a huge decision and responsibility, both financially and in terms of time and effort. Once you are determined that home ownership is for you, here are 5 tips to ensure that it is a sound choice.
1. Understand The Financial Demands of a Home Purchase - As you excitedly look through page after page of real estate listings, do not be fooled by prices that you assume to be within your means. Of course everyone these days expects to pay a bit less than the actual listing price, except in some larger, low-inventory markets where bidding wars are possible. According to Fannie Mae, “Buyers should spend no more than 28% of their income on housing costs. Buyers that go over 30% risk becoming house poor.” Using tools, such as an online mortgage calculator can help you see what a home purchase will actually cost. Here’s one on our site you can use: http://www.afrmortgage.com/calculators/MortgageLoan.html
Settling on the price you would be willing and able to pay is just the tip of the home ownership iceberg. You will next need to factor in all of the other costs, which can include appraisals, home inspections, survey reports, closing costs, attorney fees, insurance, and taxes. Leave no stone unturned in this process before you put in an offer, so you will have a good idea of what you are committing to. Your mortgage and real estate professionals can help you better understand all of the costs involved in the buying and financing processes. And, don’t forget about furnishings and appliances!
Next, have a look at what it will cost to maintain the home annually. Aspects to think about are routine maintenance, lawn care, utilities, and unexpected repairs. Some repairs can add up to big bucks such as roofing, plumbing, electrical, and appliance problems . Home owners should also have a financial safety net in case they should be unable to work due to job loss, illness, or injury. Most financial experts agree that living expenses for a three to six month period is necessary when you own a home.