June 16, 2013
Buying and owning a home can be a very expensive endeavor. What should be considered BEFORE buying?
Buying and owning a home can be a very expensive endeavor. What should be considered BEFORE buying?
Before buying a home you should consider how much you will put down, if you are going with a 15 or 30 year mortgage, how high your credit score is, if the monthly expenses are less than 30% of your gross monthly income, and if you will be living their for at least 5 years.
Putting down 20% or more is important so you do not pay PMI (private mortgage insurence). A 15 year mortgage has a better rate than a 30 year. If you do need to go with a 30 year, make sure you will be able to make payments early because it is important to make extra payments if possible. 1 extra payment towards the principle per year could shorten the loan by 5 years.
Well said, Thomas. The preparation part of the home buying process is critical to making this a positive experience. Thomas made many good points. Please allow me add to them.
Get out of debt before you buy a home. It will make the experience so much more pleasant and less stressful. This may cause you to delay the home purchase. It’s worth it!
DO NOT take every bit of savings you have to make your down payment. There will be many costs AFTER you move in. Paying for those costs with cash instead of your credit card will save you THOUSANDS of dollars.
Do not see that home as an investment. When all of the costs are factored in, the personal home because a poor investment at best. No-load index mutual funds at a place like Vanguard.com should be your place to grow your money, not your home. Your home is a place to live and enjoy your family. You can learn more by watching this video: http://www.youtube.com/watch?feature=player_embedded&v=YL10H_EcB-E#!