If you are thinking about purchasing your first home, there are some questions you need to ask yourself to determine if you are ready to purchase a home.
Consideration #1: Affordability
First, when you think about buying a home, you need to consider if you can afford to purchase a home. There are many expenses that you are going to have to budget for.
First, you are going to need to have money saved up for a down deposit. How much money depends upon the type of mortgage you qualify for and how much you want to spend on a home.
Second, you need to save money for closing costs. Closing costs are more than just a minor expense. They are often around 2-5% of the cost of your total loan. Closing costs are generally paid for out of pocket.
Third, you are going to need money to fix up things around your home. Even basic things, like painting the exterior of your home, can cost hundreds of dollars. You will need money to purchase furniture and items for the home. You need to make sure you can afford all the costs that go into purchasing a home.
Consideration #2: Mortgage Worthiness
Second, you need more than money saved up to purchase a home. You need to be mortgage-worthy as well. You are going to need to have a strong credit score to qualify for a mortgage. To have a strong credit score, you need to pay all of your bills on time. You also need to have a low debt-to-income ratio. You also need to have a substantial income and not have too many liabilities to qualify for a mortgage.
Consideration #3: Lifestyle Goals
Third, you need to consider if buying a home fits your lifestyle goals. In general, if you purchase a home, you will want to live there for a while. In fact, you need to live in your home for two out of the last five years before selling it to avoid having to pay capital gain taxes on the sale of your home. It takes, on average, around four years for one to get back all the upfront costs of buying a home. So, if you are looking to purchase a home, ideally, you should be looking to stay in that location for at least two to five years to make purchasing the home worth it financially and to allow you to build up at least some equity in the home.
If you are thinking about buying your first single-family home, you need to make sure you can afford it and that you have built up a worthwhile mortgage portfolio. You also need to make sure that living in the same place for a while fits with your lifestyle goals.
To get help buying a single-family home, contact a real estate agency, such as The Carrie Holle Group - Carmel Real Estate.