You’ve been thinking of buying a home… You’ve been checking out houses for sale in the neighborhood, pinning dream kitchens on your Pinterest, and wondering just how much you’d need to save for a down payment on a mortgage.
The million dollar question: Are you ready for homeownership? Before you dive in and buy a home, it’s important to ask yourself these five homeownership and mortgage questions:
1. Am I ready to settle down?
Buying a home is one of the biggest financial decisions you’ll make. While buying a home isn’t 100 percent permanent, you’ll want to know for sure that you’re ready to settle down before going through all the steps and taking out a mortgage for up to 30 years.
You’ll obviously want to make sure your job security and finances are in order prior to making a big purchase, but additionally, you’ll want to ask yourself some other questions. Just because you have the means to buy a house, doesn’t mean you should.
● Is there a chance you’ll want to change jobs or move shortly?
● How will moving affect your commute time to work?
● If or when you have kids, where will you want to raise them?
● How good is the school district if you have kids?
Take some time to really assess if buying a house is right for you and you’re ready to settle down and commit to homeownership.
2. How much can I put down?
Once you’ve determined that homeownership is in your future, you’ll want to assess how much you have in savings or start saving for a down payment if you haven’t already. The amount you need for a down payment varies based on the type of loan you choose, but in general, you’ll want to have between 5 and 20 percent of the home’s value available to put down.
3. Do I pre-qualify for a mortgage loan?
Pre-qualifying for a mortgage gives you an idea of the loan amount you may be approved for when you apply. With Carrington, we make it easy to pre-qualify. Simply input your location, down payment, income, debts, credit score, and military experience to see what types of loan options are available. This will give you an idea of what types of loans are available and at what price.
4. How will a mortgage affect my budget?
After determining your down payment and pre-qualification amount, you’ll want to assess what your monthly mortgage budget will look like after buying a house and how that will affect your overall budget and expenses. Keep in mind that your mortgage budget isn’t just limited to the principal payment and interest, but also includes the cost of property taxes, insurance, fees, and other related expenses.
5. Are you ready to be your own landlord?
One of the great things about renting is that if anything goes wrong with the building, it’s usually not up to you to fix it or pay for it. Your landlord handles all maintenance, repairs, and more. However, when you own your home, it’s all up to you. Are you prepared to either DIY fixes around your home or call a professional and pay when something happens?
Asking these five homeownership and mortgage questions will give you a good idea whether you’re ready to buy. If you determine that homeownership is the right next step for you, then we’re here to help.