To Buy or Not to Buy

Purchasing a home is one of if the the biggest financial decision you will ever make.  Whether this is your first home or your retirement home, this is a decision that should be well thought out.

1.  How Healthy is My Credit Score?

A mortgage can be a large financial obligation.  The fact is the lower your credit score, the highest your interest rate will be.  It is important to boost that number as much as you can before you get close to the borrowing stage.  There are many ways to go about improving a credit score.  If this is something you are interested in contact a credit counselor.  We can always recommend someone that has a proven track record with our past buyers if you prefer.

2.  Am I Making Good Progress on My Savings?

This is not meant to be about your downpayment.  This is about contributing to your key financial goals whether that be retirement, rainy days funds, college tuition, etc.  You don't want a big mortgage payment to impact your ability to contribute to yours'/your family's future.  Your down payment fund should not be part of this.

3.  Have I Accounted for All of the Costs of a Home?

The cost of a home is more than just principle and interest.  You also have to look at taxes and insurance along with utilities, periodic repairs, and regular maintenance.  Make sure that these costs can easily fit into your budget.

4.  Is Your Job Secure?

It is important to consider your employment and the longevity of employment.  Many of the problems that came from our latest financial meltdown had to do with unemployment taking a toll.  Consider how long you have been with your employer, what your future job prospects look like, and what the security of your company look like.  Finally, ask yourself "how will I pay my mortgage if I lose my job?"

5. Am I Committed to the Location?

Just because it is the up and coming area, or your dream home is in a particular neighborhood doesn't mean that neighborhood will work for you.  Test out the area.  Does it have easy communtes to work, plenty of dining, recreational activities, etc?  How are the schools?  What is crime rate?  Decide what is important to you and make sure the area you are interested in has all that you are looking for.

6. How Long Do I Plan to Live in the House?

A home is a long-term investment.  Real estate can be volitile and it not meant for the short-term.  Make sure you plan to stay in your current home for about 5-7 years.  Are you planning to grow your family?  Are you planning to downsize your family?  Will you be getting married?  A lot of these are going to have unknown answers but you at least want to pay them some consideration.

7. Am I Mentally Ready to Be a Homeowner?

Even if you are financially ready to be a homeowner are you mentally?  For example, if you prefer to move around a lot and never stay in one place too long buying a home now might not be for you.  Or if your dream is to rehab a home yourself but you work 60 hours a week consider buying a newer home that does not need as much work.  Just because you are not ready now, doesn't mean you will never be.  When the time is right it will mean that much more.