You may have always wanted to own a home – and with being quarantined to your 800 square-foot apartment, you’ve been seriously considering it. Usually, experts suggest buying a home from late summer to early fall; however, with the current interest rate environment, buying a home may be even more attractive than ever before.
Since becoming a homeowner can be emotionally and financially draining, how do you know if you’re really ready for this next chapter in your life? Here are three key questions to ask yourself:
1. Are you ready for the responsibility?
When you’re not the renter anymore, that means you’re responsible for any maintenance updates, electrical issues and property upkeep. So are you prepared to get your hands dirty and fix that leaky pipe, change the light bulb that went out over the stove or weed and mow your lawn…weekly?
Although it may not be how you want to spend your time when you get off work or on your days off, owning a home can still be very rewarding. You can give the place your own personal touches: have the wood flooring you’ve always wanted, paint the kitchen cabinets your favorite color, along with subway tile backsplash or start the perfect garden to have homegrown herbs and vegetables.
2. Is it just an itch to settle down?
Are you driving down the road in a cute neighborhood and see a house for sale and “just know” it’s for you? While it’s often good to follow your first instinct, buying a home is much more than a gut reaction.
How many times have you switched jobs or industries in the last 5 years? Let’s say you purchase a home and then get an offer to work the job of your dreams. The only catch? It’s two hours away. If you’re not planning on being in your current career – or even company – for the long run, it may be hard to pick the right spot to settle down.
Furthermore, purchasing a home is an investment. So even if you had that home for three years before you decided to sell it, houses tend to appreciate only around 3% per year. That doesn’t give you much appreciation in value unless you’ve done some major renovations.
On the other hand, if you KNOW you want to plant your roots in a certain community, whether it’s because you’re ready to start a family and you’ve found the perfect home in an amazing school district or because you’re working for a great company, then purchasing a home would be a great investment for you.
3. Are your finances in check?
As you know, buying your first home isn’t just an emotional decision; you have to take a good, honest look at your finances, too. Besides whether or not you can afford the monthly mortgage payments, here are some financial aspects you’ll need to consider:
- Down payment: Most lenders require a down payment that’s at least 20% of the home’s price. For example, if your dream home costs $300,000, your down payment would be $60,000. Check with your lender to see what’s required for the type of loan you are considering.
- Credit score: Thankfully, you don’t need an amazing credit score to purchase a house. The average credit score needed to become a first-time home buyer in the U.S. is 684. But again, check with your lender on your requirements.
- Debt: When you buy a home, you need to ensure that you can cover any hidden expenses like home inspector fees, moving costs, utilities, property taxes, Home Owner Association (HOA) fees and insurance – just to name a few. Making sure you’re without debt can help free up a lot of cash flow for these unexpected money magnets.
After you’ve asked yourself the tough questions and analyzed your cash flow, if you’ve decided that you’re ready to take the next big step, we can help you get started by finding the right mortgage loan for you. Contact one of our First Internet Bank Loan Officers by calling 1-866-842-5158 or by visiting our website so you can start searching for the home of your dreams.