Ready to Buy a Home? 5 Financial Requirements You Must Consider1/12/2011 Ready to make that first home purchase? There are at least five financial aspects of homeownership that you’ll need to consider before you take the first step. 1. Are you ready for a mortgage payment? This is one of the most important aspects of homeownership that you’ll need to consider. Homes are not cheap. They never are. Can you afford to have a mortgage? If you’re unsure, consider an FHA mortgage or other government backed financing. 2. Is your credit score high enough? If you plan to qualify for a mortgage, you’ll need to prove that you have a high credit score. You may be able to qualify for certain types of financing, such as FHA financing or a VA home loan, without high credit, but the lowest mortgage rates always go to borrowers with a solid borrowing history. 3. Do you have cash reserves? You’ll want to have some money saved up for various reasons. First of all, it will help you qualify for a good mortgage. Second, it will help you cover closing costs and other financing expenses. Third, you’ll want to have an emergency fund set aside to help you stay constant on your mortgage payments when income is tight. 4. Are you ready for maintenance? Many first time home buyers are caught off guard by the sudden costs of maintenance and property taxes that were never an issue when renting. Of the two of these, maintenance is the most unexpected. Be prepared to invest thousands of dollars into your home over the coming few years. Expect to invest more if you want to make any changes or improvements to the home. 5. Do you plan to live in the area for at least five years? This is a financial consideration, not just a lifestyle consideration. If you have to sell your home within a year or two, it’s unlikely that you’ll make your money back. You’ll probably lose money. If you’re not sure that you’ll be able to live in the area for at least five years, don’t buy the home. These are the top five financial requirements that you’ll need to consider when deciding whether or not to purchase a home. |
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