J. Dudley Schiel

Thursday, July 29, 2010

Four Signs You’re Ready To Be A Homeowner

No doubt you’ve been hearing about the current mortgage rates of around 4.5% being some of the lowest in history and that homes in Nashville are still available at a significant discount compared to four years ago. All the talk probably has you wondering if it’s your time to buy. While the talk is all true and it makes for one of the best opportunities in history to buy your first home, your decision to buy should not be based on the market alone. The most important thing is deciding if the timing is right for you to buy. The following four signs are good indicators that you are ready to buy and not just rushing into buying because everyone says you should:

You’re planning on staying in the same place for at least three years:

Plan to own your home for at least three, preferably five, years prior to selling to allow equity to build up through monthly payments against principal, appreciation, and home improvements. This equity will cover the costs of selling when you’re ready to sell and will give you a cushion against future dips in the market. If you might have to move before the three year mark, renting out your home for a couple of years to allow more equity to accrue is an option you should consider ahead of time in case the alternative is bringing money to the closing table.

You have a dependable income and adequate savings:

Allow room in your budget for a downpayment, a monthly payment, taxes, insurance, and additional costs of home ownership before you buy. You need to have a minimum of 3.5% of your purchase price to put down for an FHA loan and 20% for a conventional loan.
Only buy what you can afford with your current income and don’t plan on future raises or promotions. Adjust your budget if you plan on going down to one income from two in the next three years. If you aren’t certain of your job security or have a varying income, have adequate living expenses saved before purchasing in the event of a job loss or period of decreased income.
Consider the costs of routine maintenance, unexpected repairs, and desired home improvements when designing your budget.

You can qualify for a loan:

You’ll most likely need a credit score in the 700’s to get a preferred interest rate from a lender. Late payments and too much consumer debt are just a couple of the mistakes that can negatively impact your credit score. Contact a mortgage advisor to have your credit run well in advance of purchasing to allow time to correct negative marks on your credit report. Bad credit history can take months to repair.

You can handle home ownership:

Homeownership is not without its pitfalls. Unlike renting, when you own a home and something breaks there is no landlord to call. Repairs and house and lawn maintenance are part of the home ownership experience. Be prepared financially and emotionally for all of the unexpected expenses and occurrences that will arise over the next few years.

Purchasing a home can be a great financial investment, particularly when considering the current market conditions in Nashville and the great interest rates, but buying is only a good decision if the timing is right for you. Buying a home is the largest single investment you will probably ever make. My job is not only to help you find the right place for the right price, but also to help you make a smart decision concerning that investment that you will feel as good about when you sell as the day you buy. If you’re wondering if it’s your time to buy please give me a call so I can help you figure out if you’re ready. Whether you’re ready or not, I’ll get you started on the right track.

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