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    Three Factors to Consider Before Buying Your First Home

    1. The Current State of Your Finances

    The current state of your finances is perhaps the single most important factor to consider when determining whether you are ready to delve into home ownership. When examining your current financial state, you must answer two questions:

    • Do I Have Cash Set Aside for a Down Payment? Ideally, you need to be able to put down at least 20% of the cost of the home to avoid having to pay Private mortgage insurance.
    • Can I Afford the Cost of a Mortgage? This question seems obvious, but it is important to think about future mortgage payments, as well as current payments. If you take a fixed-rate mortgage, your payments will not change over the life of the loan, and it will be easier to predict whether you will be able to afford future payment

    2. The Stability of Your Financial Future

    If you have recently changed jobs, if you are thinking about changing jobs, or if you are expecting any major changes to your income it is not a good idea to buy a house until you are on more solid footing. Banks and mortgage lenders typically require you to have been with your employer for at least a year or two before they will consider you for a loan.

    Furthermore, you need to have a plan to pay your mortgage in the event that something does go wrong in the future, such as a layoff or a medical problem. Typically, this means you should have an  emergency fund– at least a few months’ worth of living expenses – set aside before you buy a home.

    3. Your Commitment to Ownership

    Being a homeowner is different than being a renter. You need to take care of all of your own home repairs, rather than counting on someone else to do it. You may have more yard work, as well as additional responsibilities (such as hurricane preparation and cleaning out gutters) that renters don’t have to worry about. While some people don’t mind such chores, others don’t want the hassle. Consider whether you are ready to take on these added responsibilities of home ownership before you make your decision.


    Think you might be ready to buy your first home?

    Please contact Tim Smith for more information on how to get started.



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