The dream of home ownership is written in the bedrock of this country. After the housing crisis many of us have had to place our dream on the back burner… deferred… but never forgotten.
I’m sure we all have our version of what our “Dream Home” looks like- but can you afford that dream? The answer is simple, YES!… if you plan.
Regardless of where you are in life financially, you can start today planning for your dream home. The housing market has changed drastically over the last ten (10) years. Homes that once sold for thousands of dollars were being appraised at pennies on the dollar. Foreclosures were at an all time high. Entire families were moving back home to live with parents and grandparents. It was a HUGE housing crisis. Happily the housing market is coming back and financial lenders are working with families just like yours to help you make your dream of home ownership a reality.
Where Do You Want to Live
The area you want to live in and raise your family is extremely important when buying a home. Do you prefer urban (city) or rural (suburban) living? Do you have school aged children? What area has the best public schools, (if you’re going to spend a chunk of change on your dream home you don’t want to pay for private school too). What is the ratio of homeowners to renters in your targeted area? What style of house do you prefer, Tudor, Bungalow,Colonial, Ranch or Tri-Level. How many bedrooms and bathrooms do you want? Once you’ve sat down and really given honest thought to these questions and have come up with the answers, only then are you ready to start your journey to home ownership.
What is Your Credit Score
Financial analyst say you should always know your credit score rating. Currently their are three (3) major agencies that report credit scores. Lenders look at income, assets, job history, credit score, total debt and how much you’re willing to put down as a down payment. Once a year you can receive a free copy of your credit score from each of these agencies. I recommend contacting all three agencies and receiving a paper copy of your credit scores and reviewing them with a fine toothed comb. Check for any discrepancies or inaccurate information, if you find any write to have this information removed. If you find that your score is less than you would like, don’t worry credit scores are fluid and can be increased by doing a few simple things. Do you have outstanding or long term debt? Contact the lender and make arrangements to start making monthly on time payments. Start with the least amount first, many you may be able to pay with one payment. Once you’ve paid it, it’s gone and reflects on your score as a PAID debt. This helps increase your credit score.
How Much House Can You Afford
Do you have and follow a monthly budget? Keeping track of how much money you and earn and how much money you spend is very important. Start by sticking to the right price range. Ideally, your monthly housing payment shouldn’t be more than 28% of your annual salary. Do you have at least six (6) months of savings in your savings account? Perhaps you’ll have to cut back on those fancy coffee’s and start making coffee at home. Cutting back on indulgent expenses and depositing those funds in a savings account is a great way to motivate you to save. For example, you may be currently paying $600 for rent and have been paying your rent on time for three years. You read you can afford a 100K home. Can you? A 100K home with a 20% down payment, your mortgage may be $700 + 300 insurance + $300 for taxes. Now, you’ve doubled what you were paying in rent and I haven’t included your other expenses like utilities groceries and a car note or two. Owning a home is a long term investment, make sure you can endure the investment for the long term.
Renting VS Owning
Owning a home and paying rent are two very different entities. Home ownership requires a lot of responsibilities renting does not. Home maintenance, insurance and taxes are just a few of the expenses required when owning a home. When the plumbing backs up or a window breaks you can’t just call the landlord when you own a home, YOU are the landlord. All repairs are YOUR responsibility. In addition to your mortgage payment you should have funds readily available for such instances.
Choose a Mortgage Lender
Capital One is a trusted mortgage lender whose goal is to help first-time home buyers understand how the home loan process works. The Capital One Home Loans Online Neighborhood is a free online resource where you can learn all about home buying. Their friendly online neighborhood covers all stages of the home buying process with easy-to-understand articles and helpful videos, as well as information about Capital One’s Home Loans offerings. Buying a home is an important process, but certainly not a simple one. For more information on home buying, review Capital One’s Tips for First-Time Homebuyers on Capital One Home Loans Online Neighborhood.
I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.