Buying your first home is a major financial milestone for most, and most people will only buy a few homes over the course of their lives. When buying your first home, you understandably may feel uncertain about the timing and may wonder if you should wait longer to move forward with your real estate plans. As you weigh the pros and cons of buying now versus waiting, it is important to think about these key factors.
Your Financial Strength
If you are like most people, you may think that you are financially ready to buy a new home when you can afford the down payment and closing costs. Luckily there are a number of programs to assist buyers including low down-payment programs. Just this week, the Federal Housing Administration (FHA) reduced mortgage insurance rates, resulting in a roughly $500 year savings for borrowers. This also means more borrowers can qualify for a loan.
However, even with a low down payment option, most lenders also require you to have two to three months of the mortgage payment in reserve after the purchase, and this may mean that you need several thousand dollars more than you think you need. In addition to the reserve, you also need to think about the costs of ownership. Everything from property taxes and insurance to utilities, repairs, maintenance and homeowners association dues, will impact your budget when you buy a home. Review your budget to ensure that you have the financial means to pay for these expenses on a regular basis.
I recommend calling an experienced lender before browsing home listings. This will give you the best chance for success. Even better, meet with a lender to set savings and credit clean up goals far in advance. If you need recommendations, I’m happy to connect you with lenders in the Salt Lake City area.
Your Employment Status
Another point to think about when preparing to buy a new home is your employment status. Generally, you want to be financially secure with an established position in a company with a good future. If you are concerned about layoffs, the possibility of being relocated to a new city with your position or something else that may impact your professional stability, you may want to hold off on your real estate plans. I also suggest that buyers avoid career changes or new debt when planning to purchase a home.
Your Future Plans
When preparing to buy a home, it is also important to think about your future plans. Your future plans should may include having children, having older children move out of the home, taking older family members into your home and more. Think about major life-changing events and how they will impact your real estate needs. Some may increase or decrease the size of property that you need or that you can afford, so it may be worthwhile to wait a few months, a year or longer in some cases.
Buying a new home is a major life decision, and it is not one to take lightly. It is also one of the most effective ways to build personal wealth when done right. By analyzing these factors, you can more easily make a decision that is right for you.
If you would like to discuss the pros and cons of buying a home, call me today. I’m happy to help! I’ll share my honest insights, even if it means suggesting you wait.