Homeownership brings with it a greater sense of responsibility, but it also provides stability, equity, tax benefits, and long-term wealth — and you can say goodbye to landlords and rental restrictions.
Before you submit an offer on the home of your dreams, make sure you’re prepared. This list will help make the process a little easier and hopefully instill some more confidence.
The Mortgage
Qualifying for a mortgage is a major step towards homeownership. To ensure the process goes smoothly, gather all of the financial documents requested of you (bank statements, pay stubs, tax receipts, etc.). You should also know what your credit score is. Typically, lenders will give you a lower interest rate when your credit score is deemed very high or excellent.
If you know your credit score is low, you may want to explore your options for raising it before approaching lenders. A low credit score could result in more fees and higher monthly mortgage payments.
The Down Payment
The old standby was that in order to purchase a home you should expect to afford a down payment that is equal to 20% of the home’s sale price. While that might not always necessarily be the recommended course of action today, you need to consider how much you can afford to pay upfront. And if it is less than 20% you will likely have a PMI — monthly mortgage insurance — added to your loan.
Maintenance
Unless you pay HOA fees, owning real estate property means you are responsible for the upkeep of the home and the land surrounding it. No more picking up the phone and calling a landlord every time Mother Nature drops three feet of snow at your front door or if you notice a leak in the roof.
Permanence
Moving into a home means you’re planting roots in a specific location. On average, most homeowners stay in a home for five to 10 years before considering moving again.
Before pledging your allegiance to a particular town, consider how your life might change over the next few years and if that will affect the size or location of a home you might need. For example, if you plan on starting a family, you’re probably going to need more than one bedroom. And if you’re eyeing a new job in a different city, it might not be the best time to purchase a house that is hours, or even states, away from your resume might take you.