One of the biggest questions you will ask yourself when renting or moving out is “Am I ready to buy now?” At Least it should be!! It can be a hard decision being a first time home buyer, mainly because it is uncharted territory for you. In this blog I will go over the 9 questions you should ask yourself and how to answer them, when you are thinking of buying a home.
Can I afford it?
Determining your budget is a key necessity when you are considering buying. The good thing is, you are not alone! I would recommend if you do not already have a budget in place, to get one. This will be able to show you what your spending habits are and give you an idea of what you can afford. If you are renting in a comfortable price range already, that gives you a good place to start. When it comes to professional help that is offered. I would recommend having a conversation with a lender, if you do not know any, you are absolutely welcome to get multiple opinions to see who can offer the best deal for you. They can also provide information to you of categories you can improve in so you can get on the right path to being a homeowner. Ex. Your credit needs improvement. They would recommend ways for you to get there in a meaningful timeline for you.
Where can I find a real estate agent?
If you have good family and friends that have bought or sold a home before, I would recommend reaching out to them to see who they used and if they would like to refer their agent to you. The people in your life are going to be the biggest impact on potentially finding you your next realtor! If no one around you can help, I would look up local agents in your area. That will ensure they know the area well and can tell you how that local market is. Then after you have at least 3, call them all and set up a consultation. This is where the agent and you will have a conversation about your needs and wants and what they can do to help you. It is important for you to enjoy their personality and their core values in life. It's important you get along with your agent and also know that they can get the job done!
What does a real estate agent do?
An agent is there to move the process along. They have expertise in the negotiation process, writing an offer, market area, other local inspectors and other agents, etc. An agent is a crucial part of the real estate journey because real estate is forever changing and it is ideal for you to have someone up to date. They keep you safe within the transaction and make sure that everything is up to code and done ethically as well.
What are the upfront expenses/ How much money do I need saved up?
The 2 main categories of upfront cost are your down payment and your closing costs. Your down payment is the amount you are putting down upfront on your loan. A down payment, depending on the loan, typically ranges between 0%-20%. The next are your closing costs, this includes all of the inspections, appraisal, title insurance, preparation of the deed, earnest money deposit, title transfer fees, county fees, etc.
It will be hard to determine how much you will have to save up, a lot goes into the decision. Depending on how much you can and are willing to put down, if you decide to buy down your rate, how many inspections you are getting done, how big the house is, how much work needs to be done on the house before closing, and more! So as you can see it is so much more than blatantly just giving you a number. I would recommend speaking with a lender to determine your price range and go from there on setting your saving goals. Ideally just start saving!
How important is stability over flexibility?
This one is completely up to you! If you like the flexibility of being able to move every year or being able to end your lease and up root at any time. Maybe renting is for you! If you like the stability that owning a home provides, knowing that as long as you keep paying no one can kick you out. Maybe you are ready to own your first home!
In the area you're in, is renting cheaper than buying?
Not a question, I can personally answer for everywhere! I would keep in mind that when someone is leasing a home to you it is still owned by the lessor. So they are getting you to pay the mortgage and also attempt to make a profit on top. Keep that in mind that having utilities or others included in the rent, will skew this answer as well!
Does your lifestyle fit with home owning right now?’
Home owning does come with a huge amount of responsibility. If you feel you are ready in your life to take on this responsibility, then I would take on the jump! If you are maybe late on your rent a couple of times, borrowing money from a bunch of people, just cannot handle a responsibility this big, or don't have consistent money month to month, I would put that into consideration.
Can I secure a desirable mortgage loan and interest rate right now?
The easy answer for this is just talk to a lender to find out! There are key factors that affect your rate and loan such as how much money you will put down, what your credit score is, your debt to income ratio, and much more. Knowing this can already set you up for success knowing that you might have to work on those things!
What is your why?
One of the hardest questions to ask yourself. Why do I feel I am ready to buy? That is the very first step when it comes to buying is knowing you are ready! It could be you have had a long stable job, you just got a big chunk of money, you would rather build wealth than pay landlords, or you just paid off a good amount of your debt. Whatever it is, as long as you feel you are ready, it could be time to take the leap!
With all of that being said, weighing your options instead of getting stuck in the loop of renting aimlessly is hard! You can recognize it and go through the entire process right. It may not be the time for you right now to stop renting, you may not be ready, but one day you will be and it is time to start planning for your future.
