We become so deeply invested in the idea of home ownership that we often ignore or neglect the important information involved in properly preparing for a home purchase. I strongly suggest you to visit Charles R. Green & Associates, Inc. to learn more about this. When looking for a home, one should consider several needs, aspirations, and ambitions, as well as current realities and foreseeable contingencies, before making a decision. Given that our home is typically our single largest financial asset, doesn’t it make sense to be well-prepared and thoroughly plan for the process? With that in mind, and while acknowledging that there are several emotional factors (why would anyone want to live somewhere that does not make him comfortable or happy? ), this article will attempt to understand, analyse, revisit, and address some basic financial planning essentials for owning a home.
- Before you start your search: The more you prepare ahead of time, the simpler it will be! At least six months before you begin your search, check your credit report for accuracy, etc., or consult a recommended mortgage professional to ensure that your credit – worthiness is optimised. The better your credit, the easier it will be to obtain the required loan as well as apply for the best possible rate. Remember, the lower the cost, the more house you get for your money!
- Down payment and closing costs/expenses: Since most people rely on funding (usually via a mortgage loan), you may need to save for the down payment. The majority of traditional loans require a 20% down payment (although some do not), and you must have these funds liquid and usable. You’ll also have to pay a lot of closing expenses, such as pre-paid real estate taxes and utilities, filing fees, title (title and title insurance), legal fees, and so on.
- Reserves: Will owning your own home be your American dream or a nightmare? When prospective homeowners recognise and agree to the need to keep reserves, particularly for: a) Unanticipated monthly payment needs (6 – 9 months is recommended); b) routine repairs; c) major repairs/unanticipated; d) maintenance; and, e) improvements, they encounter much less stress and tension throughout the home ownership process.