The vast majority of people don’t own their homes, yet grapple with the thought of buying their own homes, if only they could afford to do so. They’re renting for now, but they’re also constantly thinking of ways to be able to afford to buy their very own homes HVAC costco systems. The dilemma here, of course, is that their monthly wages might not be enough to save up for the down payment or qualify for a mortgage.
But, qualifying for a home mortgage loan is just one of the things to take into account when you decide to purchase a home. Buying your own home entails paying for a host of other things renters don’t have to worry about. There are a number of other differences between the cost of renting or buying.
Here are some of the factors that you ought to consider if you’re already planning to purchase a home:
1. Costs Of Home Ownership
Owning a home isn’t a simple matter of buying the house that most fits the dream house you’ve always wanted to have. There are a lot of things that come with being a homeowner. If you’re renting, all you have to mind is pay the rent as it falls due every month. Aside from that, you’ll just have to worry about your utility and other monthly bills. On the other hand, owning a home is different.
Here are some of the things you have to be concerned with as a homeowner:
- Realty Taxes – As a homeowner, you’ll have to pay for the realty and other property taxes. You’ll have to pay for these things annually.
- Mortgage Insurance – Another expense that you’ll have to cover as a homeowner would be home mortgage insurance. This doesn’t count towards your monthly payments for your home loan mortgage, so this doesn’t add up to your fixed assets. This is a yearly expense.
- Expenses For Repairs – As a homeowner, you’ll have to spend for the upkeep of your home. This includes expenses for minor repairs. Such projects help in maintaining your home, but they don’t necessarily contribute to increasing the resale value of your home.
- Home Improvement – Renters don’t have to worry about home improvement because, in the first place, they can’t make significant changes to where they’re living
- Homeowners’ Association Dues – Most homeowners’ associations require their members to pay for monthly dues.
Another thing that you have to consider when purchasing a home is the downpayment. Unless you have the money to pay for the price of the home with spot cash, the usual option is that you’ll have to apply for a home mortgage loan or some other form of bank financing. Yet, even if your application for a home loan is approved, the bank or lender will still most likely require you to give a downpayment. The usual minimum amount for the downpayment is 20% of the purchase price. In some sales, they’d take a 10% downpayment.
Before you decide to buy a home, you should make sure you’ve set aside a sufficient amount of money for the downpayment. There are also ways of raising the downpayment if you don’t have it. You can get grants, forgivable loans, deferred payment loans, and other low-interest loans. Just remember that if you need to borrow the downpayment, you’ll have to pay the monthly payments for both the downpayment and the home mortgage loan. Compute if taking such route still fits your budget.
3. Mortgage Financing
The third thing you have to consider when buying a home is that you’ll have to pay for the monthly payments for your home mortgage loan for the better part of the next 15 years, in most cases. Your monthly payments will count toward the balance of the purchase price, less the downpayment, plus the interest.
Here are some of the important things to know about home mortgage financing:
- Loan Pre-Approval: It would be wise to get a loan pre-approval before you start serious negotiations for any prospective home. This way, you’ll have an idea as tomhow much banks would be willing to lend you for your home purchase. Sellers would also take your offers to buy more seriously even if you ask for discounts and price reductions if you have pre-approvals.
- Credit Score: Banks and lenders will look into your credit score before they grant your pre-approval. To have a good credit score, you should settle outstanding bills or past dues from your previous loans, salary loans, and credit card balances.
- Debt-To-Income Ratio: Banks and lenders will also look into your debt-to-income ratio. This is the amount of your debt relative to your monthly income. The proposed home loan mortgage will be included in this to arrive at your current ratio.
Buying A Home
Renters often feel that they’re just throwing away a huge part of their income when they pay for rent because they’ll never get to own the home where they live. But, shifting from renting to owning a home isn’t as simple as shifting your monthly rent to monthly payments for a home loan mortgage. Owning a home entails other expenses, which a renter doesn’t have to worry about. But, if you’ve saved for the downpayment, and think you can afford the monthly payments as well as the other expenses, then you might be better off buying your own home.