Are You Ready For Home Ownership?
Ah, the American Dream. A large part of that dream is homeownership. But, while many hope to buy a home, not all are ready.
Home ownership is a huge responsibility, both financially and emotionally. If you’re a first-time homebuyer, do yourself a favor and take some time to consider all aspects of what it takes to be a homeowner.
Mortgage payments, insurance and taxes are only the basics when you own your own home. There’s ongoing maintenance to consider and those emergencies that pop up now and then as well.
Before you shop for a home, whether virtually or in person, ask yourself the following questions.
How much can you afford?
The first step in the home-buying process is to secure a mortgage, if you won’t be paying cash for the home. Only a lender can help you figure out how much you can afford to spend each month on a house payment, and, thus, how much you can afford to borrow.
Shopping for homes without knowing how much you can spend wastes your time, wastes your real estate agent’s time, the homeowner’s time and t sets you up to be disappointed when you look at homes you can’t possibly afford. Then, those that you can afford will pale in comparison.
Do you know what your debt-to-income (DTI) ratio is? It’s ok if you don’t, your lender will determine what it is. But, knowing it helps you get a rough idea of how much work you’ll need to do to get a loan.
What the lender will look at is how much debt you hold in relation to how much money you bring in.
Debt is how much you pay each month for housing, child support, alimony, loan repayment and revolving credit payments. Add all the debts together and then divide the sum by your before-tax monthly income. Then, multiply that number by 100. The result is your DTI.
If your DTI exceeds 36 percent, you’ll need to work on one or both sides of the ratio – the income or the debt. Take on a second job, pay off debt and bring down high credit card and loan balances.
Are you ready to buy?
When the plumbing leaks or the basement floods it will be up to you, as the homeowner, to make or pay for the repairs. No longer do you have a landlord to take care of these things.
It’s important to give yourself a maintenance cost cushion – most financial experts agree that you should set aside at least 1 percent of the purchase price of the home each year for maintenance.
We Can Help
If you feel that you are ready to buy an Edina home we hope that you’ll allow the Kris Lindahl Team with RE/MAX Results to assist you.
We are committed to helping our clients find the best home at the right price. We can also assist you with finding down payment and closing cost assistance programs and we offer financial incentives to certain clients, depending on their occupation.
Don't hesitate to contact us to find out more about how we can make buying your first home easy.