Many people dream of owning their own home, but is home ownership right for you? Purchasing a home is a major financial responsibility that you will have to consider carefully to ensure that you will be able to take it on successfully. No one likes to think about whether or not they would be able to make housing payments, but it is much better to consider this worry before the mortgage bill is sitting on your kitchen table. Consider the top five steps you should take before you commit to purchasing a home:
- Talk with your family about making the commitment. If you are afraid to talk about money issues it can put stress on your relationship, which will make the situation harder to deal with. Talk about your long-term goals and what each adult in your family can and will commit to assisting with your dreams of home ownership.
- Evaluate your household income. Know exactly what you are making and how that is likely to change in the next few years. Do not commit to spending more than one third of your household income on owning and maintaining your home each month.
- Be honest about your needs and what you can afford. Do not purchase a large home you cannot maintain just to keep up with friends, coworkers and the like.
- Check out the market. If you suspect that you will need to move again within five years, make sure you are buying into a strong market that will allow you to get rid of your home. Otherwise you may wind up having to pay two mortgages.
- Look at your savings. If you cannot afford to make at least a 20 percent down payment, it can put you in a tight position financially. The more you have in the bank before you borrow, the easier it will be to get a substantial loan.
If you are wondering “is home ownership right for you?” then you need to be honest about the specifics of your financial situation. Once you have determined that you can take the financial and emotional responsibility for buying and maintaining a home and talk to your bank about getting the necessary loan. Do not start shopping for a home until you have gotten pre-approved for a loan. This will save you a lot of time once you start shopping for a home because you can be honest about what you can afford and what kind of work will be involved in home ownership.