There’s no way around it: Buying a home is a huge investment. Sure, you’re tired of that rental of yours or your current home is feeling a bit too cramped – but how do you know if it’s the time is right to take the plunge?
Thankfully, there are 5 simple questions that you (or you and your partner) can ask that will tell you if the time has come.
1. Do you understand the home buying process?
If you’ve never bought a home before, you might not be prepared for how different it is from other large purchases. Unlike purchasing a car, boat or high-end computer, buying a home takes time and has places where you might face setbacks.
Working with an experienced real estate agent is a definite advantage. “Your agent is more than just a guide and source of information,” says Steve Shulaw, a real estate agent with Real Living CCR in Lima. “He or she will be your advocate and negotiate on your behalf for the best outcome.”
2. Do you know how much home can you afford?
Know your needs. You shouldn’t purchase a home that’s too small for your family. On the other hand, buying a home shouldn’t put a strain on your finances. Be practical, and remember that there are many options out there.
“An agent who knows the area will be able to tell you where you can find the best value,” Shulaw says. Don’t look only at the mortgage payments, either. You’ll also need to pay property taxes, insurance, and (depending on the neighborhood) homeowners’ association dues.
3. Is your credit score the best that it can be?
As part of the buying process, your personal finances will be picked over with a fine-toothed comb. You can head off any potential problems by taking a look at your credit report and correcting any errors that you find. The Federal Trade Commission requires the three major credit-reporting agencies to offer free credit reports once every 12 months. You can get yours at AnnualCreditReport.com.
4. Have you saved enough for a down payment?
For conventional loans, 5 percent of the purchase price is the norm. If that doesn’t fit with your financial situation, you may also be able to apply for a Federal Housing Administration (often referred to as “FHA”) loan with as low as 3.5 percent down.
Most banks will require that your down payment funds “season” in a savings account for a certain time period before use, so you’ll need to keep those down payment funds off limits for paying bills or other uses. If you’re still not sure you’ll be able to gather enough, many banks will allow “gift funds” from a relative.
5. Have you been preapproved for a loan?
Having your bank’s preapproval letter in hand gives your offer a huge boost in credibility. This is a big plus if you’re competing with other buyers for the same property. “Being preapproved makes you so much more attractive as a buyer,” Shulaw says. “The last thing you want to do is to have your offer accepted and then have trouble obtaining a loan from your financial institution.”
So how did you do? No matter your answers, a qualified real estate agent like the agents of Real Living CCR can guide you through the search for your new home. With offices in Lima, Indian Lake and Wapakoneta, Real Living CCR is ready to work for you through every step of your real estate process in order to make it a memorable experience.
For more information, visit them online at RealLiving.com/CCR-Realtors or call 419-222-0555.
