For many people who live in the U.S., homeownership has long been touted as being a significant portion of The American Dream. As a result this is a goal that many Americans strive for and eventually the decision is made to enter the world of homeownership. This is often one of the biggest decisions of a person’s life, and it can also have the biggest impact on both the relationships and finances of the potential new home buyer.
To make this a positive impact versus a negative one a person must take the right steps based off of educated decisions. Fortunately there are many resources available to offer assistance.
Is Buying a Home Right For You?
Before taking the first step towards becoming a home buyer a person must be positive that it is the best move for his or her lifestyle and finances at the moment. Although home ownership is the goal for many, it is not the best choice for everyone.
For some, renting is seen as a more desirable option for them. To make the decision to become a homeowner a person must take a close and honest look at the advantages and disadvantages of homeownership in relation to their personal circumstances. When considering buying a home one must determine if all of the expenses that are associated with homeownership will put them at a financial disadvantage.
Property taxes, mortgage payments, and maintenance costs are just a few of the home expenses that a person must consider. He or she must calculate whether these will take too much from their income and if they are willing to make the necessary sacrifices in order to afford them. Home ownership may also not be the best option for people who are not stable in terms of settling in one spot.
A person who frequently moves due to work or other circumstances should consider the hassle and potential loss in home value if they must move and put their home up for sale. Advantages to home ownership are plentiful.
For people who are financially able to manage the cost of buying a home, they can enjoy the tax deduction that comes from the interest paid on their mortgage payments and from property taxes. The idea of setting roots in an area is also an appealing advantage, particularly for people with children or for people who are starting a family.
To help with making a decision about what is best, start by using a home affordability calculator.
What to Consider Before Buying
Once the decision has been made to purchase a home, it is important to know what to look for in choosing the right home. Creating a checklist will help make it easier to find the perfect home.
Location should figure high on the list such as the safety of the neighborhood, whether it is in a quiet area, and its proximity to quality schools, shopping, and one’s employment. Details such as the number of bedrooms and bathrooms, floors, property tax, and the presence of a home owners association must also be considered.
To help reduce future home expenses associated with repairs, look for homes that have been well maintained in terms of the home itself and the yard. Obtaining a mortgage is one, if not the, most important steps that a home buyer must complete.
A person should begin the process of obtaining a loan as much as a year in advance. This allows him or her to get their finances in order as they may be required to put down a down payment anywhere between five and 20 percent. For this reason, the home buyer should also be prepared to shop around for the best rates and terms that he or she can get.
One of the best ways to shop for a home is to get pre-approval prior to starting one’s search. This lets the seller know that the buyer has been evaluated by the lender and what the loan amount is.
- Fox Business: Mortgage Tips for First-Time Home Buyers
- Money Mechanics – Buying a House (PDF)
- Homebuyer’s Resource Guide: Home Ownership Made Easy
- Ten Common Mistakes of First Time Home Buyers
- IRS – First Time Home Buyers Credit Questions and Answers: Basic Information
- Colorado State University – Buying Your First Home
- Tips for Buying Homes
- FTC Consumer Alert – Buying a Home: It’s a Big Deal
- Can You Afford to Buy?
- U.S. Department of Housing and Urban Development: Buying a Home
- Mortgages for Homebuyers and Homeowners
- How to Buy a Home With a Low Down Payment
- Home Buyers Round Table: Home Buyer Links
- Home Buying and Maintenance Links
- First Time Home Buyer Resources
- Financial Tips for the First Time Home Buyers
- Helpful Links for Homebuyers