It’s a huge decision, deciding to move out of your rental and move into something you can call “Home Sweet Home.” How do you know you are ready for this big step? See if the following questions can help you determine your readiness for homeownership.
Is the Timing Right to Purchase a Home Now?
Could it be that you are thinking of starting a family or you have simply outgrown the capacity of your rental? If so, maybe it’s time to put down roots in your own place.
Perhaps the driving force is that you would like to see that chunk of your income going into housing that earns you money rather than just an expense you pay each month. You’re not alone. In 2016, 35% of all home buyers were first-time buyers; many of them went through the same process that you are now.
Here’s another thought! Maybe you’d like to have more control over your surroundings. You might like gardening. Or you would like your living spaces to have your personal touch on them; your choice of paint colors, lighting elements you like, a gas range instead of electric, or a pool in the backyard.
All these things are usually not possible in a rental situation.
Do You Have Your Financial “Ducks in a Row”?
Let’s consider your down payment. FHA loans can be secured with a minimum of 3.5% down payment. However, more than 5% down will allow you to secure a fixed-rate conventional loan. If you can manage it, a 20% down payment or more will help you pay less interest over the life of the loan. And of course, if you are a member of the military, a veteran, reservist, or National Guard member, you are eligible to apply for a VA loan.
There are also some locations that qualify for 100% financing where a down payment is not needed at all.
Make sure your credit is in really good shape and don’t open any new lines of credit now. Check to make sure that buying is indeed a good deal for you financially. Charles Schwab has an excellent calculator that weighs information to determine if buying or renting is the ideal option for you. Give it a try!
Can Your Budget Handle Owning a Home?
Your mortgage will be just a piece of your overall debt ratio. Things like maintenance, insurance, taxes, and if applicable, homeowner’s fees are also considered in your overall debt.
In most cases your debt ratio cannot exceed 43%; this includes car loans, credit cards, student loans, and other forms of debt. If your debt is within this range and you have a good payment history, then plan a meeting with your friendly, neighborhood banker and get pre-qualified.
Great! You’re Pre-qualified! Time to Start Looking for Your New Home!
Now it’s time to work with your trusted real estate agent to find a home that works for you. You know what you can afford because you’ve done the financial work ahead of time. Besides the normal questions like how many bedrooms and bathrooms do you need, here are some questions an agent may ask you in order to narrow down your search:
- Do you have some neighborhoods in mind?
- Are you willing to do a bit of work or have some work done in order to make the house your home?
- Would you rather find a home that is move-in ready?
- How important is proximity to work?
- What amenities do you want for your home or the neighborhood?
- Are there particular school districts that are important to you?
This is your first home. It’s a huge commitment, so put your trust in a buyer’s agent who listens to what you want, is knowledgeable about the Raleigh market area, and represents you professionally. A helpful agent can make the whole process go smoothly and keep you from making costly mistakes during the process.
Hire an Agent Who Truly Understands Your Home Needs
If you are considering buying a home, we would love to help.
At Linda Craft & Team, REALTORS®, we have over 30 years of experience developing our method of finding you just the right home in the Greater Raleigh area and providing buyers with exceptional guidance, especially first-time buyers. As one of the top real estate teams in the Triangle, we can guide you through the home buying process, reduce your stress, and make the whole experience from start to finish a good one. We also offer the service of one of our FREE moving truck to all our clients.
Contact us today at 919-235-0007 to learn more about buying your first home in the Greater Raleigh area.