Should you buy your first home or remain a renter? It is a classic question. How do you know if you are ready? Can you afford a mortgage and all of the fees associated with securing a loan?
If you are pondering these questions, here are some items to consider:
- Can you afford the home now and will you still be able to afford it in 6 months or a year from now?
- Do you have enough savings for a down payment and unforeseen costs, like major repairs?
- Are you credit worth? Will you qualify for a mortgage?
- Are you emotionally ready to put down roots and take care of a home?
- Is your job going to change in the next few years? Will your company relocate you to a different area?
- Are you planning to get married?
There are many tax benefits to home ownership, such as a tax deduction for the interest on your mortgage and a federal deduction for your local property taxes.
You must evaluate neighborhoods closely, what is a fair market price for a home you are interested in? This is where the expertise of a real estate agent comes into play, they can show you the “comps” or the prices that comparable homes in the neighborhood have recently sold for.
The decision to buy, especially a first home, is a life-changing experience but with the proper lender and real estate agent to guide you, it can be a dream come true.
For example, if you were to purchase the home below for $125,000 and you qualified for an FHA mortgage, your approximate monthly payment would be $831. This is based on:
- 3.5% downpayment of $4,375
- Annual property taxes of $912
- Annual homeowners insurance of $700
- And includes an estimate of $80/month for private mortgage insurance
