Are you thinking about buying your first home?
You may be a renter thinking about purchasing a home. Home ownership is a serious commitment, and there are many factors to consider:
How long you plan to live in the home
Selling a home costs money. If you potentially may have to move in the short term, the value of your home may not have appreciated enough to cover the costs of buying and selling.
Although average appreciation in Northern Virginia has been around 20% per year over the last 5 years, economists are expecting a lesser level of appreciation. Hence, take this into consideration in the event, you should need to sell. The real estate market may have downswings.
How long the home will meet your needs
What features do you require in a home to satisfy your lifestyle now? Five years from now? People tend to remain in homes longer than they initially intend, primarily due to the work and expense associated with moving. Therefore it is worth considering a home with room to grow.
Your financial health - your credit and home affordability
Is now the right time to buy a home? Would you rate your financial picture as healthy? Is your credit in good standing? Do you have a high credit rating? Visit http://www.myfico.com/CreditEducation/ to learn from the people that create your credit score how to improve it.
To determine how much home you can afford, talk with your lender or Miguel Avila can find you a lender. The 28/36 lending rule means that your monthly housing costs can not exceed 28% of your income and your total debt load can not exceed 36% of your total monthly income. Depending on your assets, credit history, job potential, and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, it's important for you to know your options.
Where the money for the transaction will come from
Typically, homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary, if you can prove that you are a good financial risk for a lender. Believe it or not, there are still "No money down" mortgages available, but these have additional costs associated with them.
The ongoing costs of home ownership
Maintenance, improvements, taxes, and insurance are all costs that are added to a monthly house payment. If you buy a condominium or townhouse, a monthly homeowner's association or maintenance fee will be required.
If you are still unsure if you should buy a home after making these considerations, you may want to consult with your accountant or financial planner to help you assess how a purchase fits into your goals.