A home will be one of the largest purchases you’ll ever make. As such there, are dozens of things to consider before buying a home. The first and most obvious is the question of whether you can afford a new home. You’ll need to consider more than the monthly payments. The additional costs of purchasing a home include:
- origination fee
- inspection fees
- credit report fee
- tax services fees
- attorney’s fees
- title insurance
- homeowners insurance
Also think about what you might spend to fix up the home and yard after you move in. Consider also the following:
Is your credit history in good enough shape to allow you to get a mortgage?
Lately it is especially difficult to get a mortgage with bad credit. Obtain a free credit report immediately, review it carefully, and clear up any problems before you begin the mortgage application process.
Do you have enough cash to cover the down payment on the home as well as the closing costs we discussed above?
Ideally, you will want to put down as much as 20% of the purchase price for the home. While some buyers can get away with putting down less, often the mortgage fees and higher interest rates that come along with a low down payment outweigh the benefits.
Are you mature enough to own your own home?
As exciting as it can be to move into your own place, you will also be your own landlord and will need to take care of your own repairs and maintenance, or find the money to hire somebody to take care of them for you.
How long do you plan to stay in your new home?
A good rule of thumb is to not buy a home if you plan to live there for less than two years. There are few areas that appreciate fast enough to cover the fees involved in the purchase of the house.
By answering these questions honestly and thoroughly, you’ll know if you are truly ready to buy your first house.