The thought of buying a home can be daunting but it doesn’t have to be. Determine if you’re ready to buy a home by asking yourself these questions – you may even realize you’re better equipped than you think.
How much house can I afford?
Your monthly mortgage payment is one of the main factors in determining if you’re ready to buy a home. Without the financial security to make your payments, your home could become a burden. If you are renting, then you already know approximately how much your budget can handle. Maybe you need to find something a little more cost-effective or maybe you can increase your housing budget. Unlike renting an apartment that may include utilities, it’s important to factor in costs in addition to your mortgage payment. Many websites can give you a rough estimate but you will need to consider the following when deciding how much house you can afford:
- Mortgage Payment (principal plus interest)
- Private Mortgage Insurance (PMI) if required
- Property Taxes
- Homeowners Insurance
- HOA fees if applicable
Many financial experts recommend that your monthly mortgage payment does not exceed 30% of your monthly income. While this may not apply for everyone, it’s a great rule of thumb to make sure you aren’t spending too much on housing.
Do I have enough for a down payment?
Gone are the days when everyone is required to have a 20% down payment. Though having a significant down payment can lower your monthly payments and reduce the chances of needing PMI, you don’t technically need a large down payment. We highly recommend having a down payment for the above reasons but even something as low as 5% can help when buying a home.
Am I ready to settle down in one area?
Where you are in life and where you see yourself in the next few years should be taken into consideration when buying a home. If you feel financially ready to buy a home, but desire to work across the country at some point, then you may want to consider waiting. Many experts recommend staying in a home at least 5 years before selling. If you feel financially prepared and love the area where you live, then you may be ready!
Will I be able to afford a home emergency?
Whether we like it or not, owning a home comes with unexpected expenses that are now your responsibility. Say goodbye to contacting maintenance to fix your leaky washer for free. While you may be able to afford the monthly payment, it’s equally important to consider the cost of repairs. Replacing a damaged water heater, air conditioner, or furnace could cost you thousands, so it’s wise to save for a rainy day. Before you buy a home, consider your ability to set aside money for emergencies. Saving consistently, even a small amount, could be just enough to ensure you’ll be a-okay on a cloudy day.
What will I need to buy once I’m a homeowner?
Purchasing a home comes with buying items that aren’t always necessary before becoming a homeowner. Tools, a lawnmower, guest bedroom furniture, and a shovel or snowblower are items you may not need until you own a home. These aren’t costs that should deter you from purchasing your own home, but it’s important to consider what you need and set a budget. Remember that not everything has to be bought at once. You can purchase items over time to lessen the financial burden.
Are you ready?
If you’re currently renting, it’s likely you’re able to afford a home! Though there may be extra costs involved with owning a home, setting aside money in a savings account can help ensure you’re prepared. If you’re ready to take the next steps, get started with a rate quote, or begin an online application. To speak with a Mortgage expert, contact Community West Credit Union at (616) 261-5657 to discuss your Mortgage options. Our mortgage loan officers are ready to help you make moves today!