Dec 132010

Buying a home
Buying Your First Home?  Thinking about purchasing a home of your own?  Keep these critical considerations in mind:

  • How long the home will meet your needs.

Consider your life style and family size. How many bedrooms do you need?, How many will you need? Make sure to take an objective view of your needs and wants list.

  • How long you plan to live in the home.

If you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The length of time that it will take to cover those costs depends on various economic factors in the area . If the area experiences an economic up turn, the length of the time to cover these costs could be shortened, and the opposite is also true.

  • Your financial health – your credit and home affordability.

Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, but at what cost? Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it’s within your comfort zone.

To determine how much home you can afford, talk to a lender or go on-line and use a “home affordability” calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the “32/40” rule applies, in today’s home mortgage market, lenders are making loans customized to a particular person’s situation. The “32/40” rule means that your monthly housing costs can’t exceed 32 percent of your income and your total debt load can’t exceed 40 percent of your total monthly income.