Buying a new home for the first time can be a very scary experience if you don’t know how to prepare yourself for some of the difficult issues that can come up during the process. If you are thinking of buying a new home asking yourself these 7 questions can be a good way to avoid speed bumps further along in the process:
1. How is my current credit score?
Credit score can be a big factor in whether or not you have the ability to purchase a home. If you do not have a good credit score, it will be more difficult to receive a loan for your new home.
See also: How to Raise your Credit Score 100 Points in 45 Days
2. What does my savings account currently look like?
You should always have a considerable amount of savings put aside for home emergencies when you are a home owner. These funds should be reserved for emergency home fixes, such as a broken water heater, or a flooded basement.
3. Have I considered all of the costs that come with purchasing a home?
There are many additional costs that come with purchasing a home. In addition to your mortgage payments and taxes on your home, you should account about 1-4% of your home’s value for maintenance each year.
4. How secure do I feel in my current job?
Because of the added costs I mentioned above, you should get into a stable and secure career before purchasing a home. A loss of income could mean foreclosure on your home in this economy. You should also ask yourself: how will I pay my mortgage if I lose my job?
5. Am I committed to the location and surrounding area that the home is located in?
If you don’t like the location of your home and the surrounding area, you won’ t feel strongly tied to the home. Check out the surrounding school systems if you plan on having children. Try the local restaurants and see which stores and attractions are nearby. Checking this out before you purchase a home can have a large impact on which home you ultimately decide to purchase.
6. How long do I plan on living in the home?
Purchasing a home should be considered a long-term investment. If you are looking to live in one place for only a few years, home buying may not be the best option for you. Typically, a homeowner should stay in their home for at least five to seven years before reselling the home. When thinking about this question take into consideration the following:
- Will I be changing jobs anytime soon?
- Do I want to start a family, and how big do I want that family to be?
- Am I going to get married (or divorced)?
- What other types of unknowns may occur within the next 5-10 years?
7. Am I mentally prepared to be a homeowner?
There are additional factors to consider other than just the financial aspect of buying a house. You should be emotionally as well as financially invested in purchasing a home. If your heart isn't in it, it may not be the right time to buy. Owning a home is akin to being in a “long-term relationship” that has no easy way out. It will be a painful and drawn out process to resell the home once you have purchased it, so make sure you are ready for the long term commitment.
So now you're ready to purchase your home? Congratulations! (Don't forget to speak to your knowledgebroker about having the proper insurance coverage!)
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About the author: Lauren is an R&R Insurance intern learning about the insurance industry through sales and service experiences.
