When you are buying a house, there are many things to consider. Unfortunately, the excitement of buying a new home can cause many people to forget about certain considerations and they often rush into the purchase without being smart about the decision. Before you sign the dotted line, take a step back, breathe and ask yourself the following questions to make sure you are making the right decision.
How Long Do I Plan on Staying?
If you are considering buying a new home, you should plan on staying in it for at least a few years. If you are in a transition phase in your life and you may be moving soon, buying a home right now may not be fore you. The costs of closing and other fees associated with buying a home are enough such that you will lose money on the purchase if your do not stay for a few years and build up equity. However, if you plan on staying in the home for five years or more, it may be a wise decision to buy instead of rent.
Can I Afford This Home?
Being able to afford a new home is more than just being able to make the payments. Your lender may tell you that you can afford the home, but it is up to you to make the final decision. You have to consider the insurance, property taxes, maintenance and utilities that will also need to be paid regularly. Lenders do not generally consider these other costs and they often just look at your income to compare it against the monthly mortgage payments. That is one of the reasons the housing industry fell into the financial crisis that has occurred in recent years.
Is My Credit Good Enough Right Now?
If you have blemishes on your credit report, you may want to consider waiting six months to a year before buying a new home. Take this extra time to clean up your credit and bring up your score as much as possible. You may have a score that qualifies for a mortgage loan, but raising your score will help you qualify for a reduced interest rate which could save you thousands of dollars over the term of the mortgage.
Does the Area Have Good Schools?
Living in an area that offers good schools is great for two reasons: Your children will get a good education and it is a great selling point if you decide to move away. That second reason is why you should try to find a home near good schools even if you don’t have kids. For most families, living in a good school district is the top deciding factor when choosing a new home.