Are you Ready to Buy a Home - Keller Williams Realty



Are you Ready to Buy a Home? | | |

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|[|The last time you mailed your monthly rent check, did you find yourself wishing that you could put that money toward investing |

|p|in a home? Ownership does offer certain advantages and fulfills many peoples' dreams. But before you buy, you'll want to ask |

|i|yourself if ownership suits you, whether it's the right step right now, and whether you can afford it. |

|c|Does ownership suit you? |

|]|Ask yourself these lifestyle questions. |

| |1. Will career advancement require you to move? |

| |Although home ownership won't completely tie you down, it adds obvious complications if you must move to take a new job. |

| |2. Will you miss the benefits of renting, and are you ready to take on the obligations of ownership? |

| |Maintaining a home and a yard take time out of every week. Fixing the dripping faucet and the clattering furnace become yours |

| |to manage. Would you rather rent and be able to call the landlord? Will you miss apartment amenities such as a workout room or |

| |hot tub? How about apartment security features including locking mailboxes, secure parking, and a secure entry system? |

| |3. Owning a home offers certain benefits. How important are the following to you? |

| |Having a yard/garden |

| |The ability to decorate and landscape your way |

| |Having a garage, shed, or workshop where you can store belongings or pursue hobbies such as woodworking |

| |Living in a neighborhood |

| |Increasing your living space |

| |Is now the time to buy? |

| |You may feel that you should buy now because the market may never be better than it is now. Depending on the area, that may be |

| |true. But historically, most markets go up and down, favoring buyers, then later, sellers. If you feel pressure for this |

| |reason, remember that the market will probably swing back in your favor in the future. Your agent may be able to advise you |

| |regarding the market in your area. |

| |Mortgage rates historically have also gone up and down, sometimes within relatively short periods. Consider the big picture. |

| |Ask yourself whether your current resources allow you to get the kind of home and loan you want at this time. |

| |Click here to get today's rates. |

| |Can you afford it? |

| |The outlay of cash required to buy a home can be quite high. There also may be secondary costs that come with making the |

| |transition from renting to owning. If you're not sitting on a huge nest egg, though, and still want to buy, there still may be |

| |options. |

| |Purchase costs |

| |How much should you save in order to cover a down payment and closing costs? |

| |Down Payment. The amount you need for a down payment varies depending on how much money you have to contribute and the type of |

| |financing you obtain. Some lenders want you to put down as much as 20%. On the other hand, you may qualify for 0% down |

| |financing, requiring you to cover only closing costs and incidentals. 5% down (the minimum many lenders will accept) on a |

| |$100,000 house is $5,000. Don't have that much saved? You could consider borrowing the down payment from a relative or another |

| |lender, but that means more money to pay back and greater overall cost because you pay interest on the down payment too. You |

| |may be better off waiting until you have enough tucked away for a down payment. |

| |Closing Costs typically range from 3 to 6% of the home sale price. On a $100,000 house, that's $3,000 to $6,000. |

| |Private Mortgage Insurance (PMI). If you put down a minimum down payment, the lender considers it a risk to give you a loan. |

| |But they're more willing to loan you money if you pay for insurance that covers the lender against your default on the loan. |

| |The monthly PMI fee depends on how much coverage the lender requires and what the PMI issuer charges. If you get a conventional|

| |loan, you can eventually get rid of PMI. |

| |Property Taxes. This amount depends on local property tax rates. Check with the local tax assessor or your real estate agent. |

| |Homeowners Insurance. The amount varies depending on a number of factors including the amount of coverage, deductible, and so |

| |on. An agent will be able to give you a rate quote. |

| |Other costs |

| |You also may encounter secondary costs. Take these into account as you determine the cost of making the transition from renting|

| |to owning. |

| |Figure in the cost of purchasing appliances and furnishings that you do not already own if they are not included with the home.|

| | |

| |What stays with the home varies from one seller to the next, but typically, the stove stays while the refrigerator, washer, and|

| |dryer do not. Often, a built-in dishwasher stays with the home while a portable may not. |

| |If you don't have these things, decide whether you need them right away and can afford them. If you plan to buy these items on |

| |credit, first find out if payments will fit your new budget. |

| |You can expect to spend some money on maintenance and repair. You may need to obtain lawn and garden tools, a small tool kit, |

| |and perhaps a ladder. Be prepared for the unexpected, too. Even the best home inspector may not be able to foresee your water |

| |heater breaking down two weeks after you sign papers. A little money set aside for such emergencies is a good thing. |

| |Financial advantages of ownership |

| |Owning a home isn't all about expenses and obligations. Ownership offers financial benefits too, including these. |

| |A tax break. Probably every homeowner smiles ear to ear the first time they get to deduct mortgage interest from their federal |

| |tax return. |

| |A way to save for the future. Each time you write a mortgage payment check, you gain a little more ownership interest in the |

| |home (called equity). Like savings, equity is the amount you could convert to cash if you were to sell the home. |

| |Increased value. Like any good investment, you are in a favorable position if you buy low now to sell high later. You stand a |

| |good chance that your home will increase in value the longer you own it (depending on the local market), and that's like money |

| |in your pocket. |

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