When is the Right Time to Buy a Home?

Categories: Buying Property Guest Post

The decision to finally buy your first home after renting for many years is a big decision that is worthy of plenty of research and debate. While many homeowners do sell their home every couple of years either to relocate, to upgrade or to downsize, a home is nonetheless one of the largest purchases most people will make over the course of their lives. Further, taking on a mortgage payment generally obligates you to a monthly payment that likely will be the largest expense in your budget. The mere thought of buying a home can strike you with feelings of anxiety and stress. However, despite these feelings, the desire to own your home, build equity in your home and decorate your space how you like without concern for what the landlord thinks are all reasons why many people overcome worrisome thoughts and pursue their desire to buy their first home. Before you take this lofty step, it is a good idea to make sure your ducks are in a row. Consider these important points.

Do You Have a Down Payment?
At one time, it was common for mortgage lenders to make zero percent down payment loans to borrowers. Some even offered 103 percent or 105 percent loans which gave the borrower cash back at closing! However, financing has tightened, and you may be hard-pressed to find a loan without at least a minimum of three to five percent down required. Many lenders prefer to see at least ten percent down even if their stated requirements permit a lesser down payment. Your down payment establishes equity in your home, and it will provide for a lower monthly payment. Further, if the real estate market bottoms out again, as it did only a few short years ago in many parts of the country, the equity you put into your home may help you to avoid becoming “upside down” in your mortgage. You don’t want to be in a situation where you are forced to sell your home but owe more than it’s worth.

Do You Have a Nest Egg?
There are so many financial benefits associated with owning your home. You will build equity with each payment you make on your mortgage. You can write off property taxes as a deduction, and this can reduce your federal tax liability on April 15. Over the years, you will eventually pay off your mortgage, and you will own your home free and clear. This creates a situation where you never have to pay rent or a mortgage again. However, there are costs associated with home ownership too. You may be prepared for the regular expenses of home ownership like HOA dues, property insurance and higher utility bills associated with living in a larger space. However, you may not be prepared for those other unexpected expenses that inevitably do crop up from time to time. For example, the AC or heater may require repairs or replacement. Your roof may develop a leak and require repairs. Your toilet may overflow, and you may need to pay for emergency plumbing services. These things won’t happen every day, but they will happen. Having a nest egg built up can help you to more graciously accept what life may throw your way, and it can prevent you from having to go into debt by charging these expenses to your credit card account.

What Are Your Long-Term Plans?
A final consideration to factor into your decision-making process involves your personal plans for the future. Are you married, or do you plan to get married soon within the next few years? Do you have kids, or do you plan to have kids soon? Are there ample employment opportunities in your city, or will you likely need to look outside of your city if you lose your job? When you purchase a house, you are taking on a larger commitment than simply signing a lease. When a lease expires, you can move on with your life without looking back. When you own a home, you are tied to that property until you are able to sell it. Factors like a growing family, a possible relocation in the near future and more should be taken into consideration when buying a home. These factors may or may not dissuade you from making a purchase now. However, if you do make a purchase now, you may consider buying a home that will meet the needs of a growing family or that has greater appeal so that it it easier to sell if necessary.

Every potential home buyer should carefully consider these factors before buying a house. Eventually, most people will become a first-time home buyer, but you do want to make sure that now is the right time for you.

This article was written on behalf of Dean Birks – Royal Lepage Prince George, a leader in real estate in Prince George BC. Click Here for more information.

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