Are You Ready to Buy a Home? Consider These Factors
Key Considerations Before Buying a Home
Are you ready to embark on the journey of homeownership? Let’s delve deep into your heart (and bank account) to assess your readiness. Defining your motivations and desires is an excellent starting point, but there are crucial factors to address before taking the leap into owning a home.
1. Assess Your Financial Situation:
It’s important to evaluate your financial landscape. Consider your debt load, including credit cards, utilities, car payments, childcare, and groceries. Remember that unexpected expenses like a broken air conditioning unit will directly impact your budget. Can you comfortably handle unforeseen emergencies, monthly bills, and mortgage payments? As a general guideline, it’s recommended to allocate no more than 28% of your gross monthly income towards housing payments.
2. Review Your Credit History:
Your credit history plays a significant role in securing a mortgage loan. Delinquencies in credit card and bank payments, past bankruptcies, or unpaid student loans can hinder your eligibility. To ensure a smooth loan application process, obtaining a credit report for a small fee is recommended. This allows you to address any misunderstandings or discrepancies before applying for a loan.
3. Evaluate Your Employment History:
Lenders typically favor two years of continuous employment as a sign of stability. However, job changes can be advantageous, especially if they come with increased pay. If your work history hasn’t been continuous over the past two years, having a reasonable explanation for employment gaps can still qualify you for a loan.
4. Save for Down Payment and Closing Costs:
Aside from the borrowed amount, lenders usually require a cash investment of around five to twenty percent of the purchase price as a down payment. For example, for a $100,000 home, a ten percent down payment would amount to $10,000. Additionally, closing costs, including attorney fees, inspection fees, escrow charges, and document fees, typically account for about five percent of the purchase price.
Credit Unions Contact Information:
– Experian: 1-888-EXPERIAN (397-3742)
– Equifax: 1-800-997-2493
– Trans Union: 1-216-779-2378
By carefully considering these factors, you can confidently approach homeownership, making informed decisions along the way.