Buying a new home can be a very time-consuming, confusing and exhilarating experience. However, this is also a time when people must be very cautious in order to assure that they get the best possible mortgage for a home that they will be comfortable in for many years to come.
While most people start off by cruising the area that they'd like to live in and that they feel they can afford to look for homes for sale, there is actually work to be done before ever arriving at this stage. For instance, a sincere budget needs to be considered beyond what a person can afford to pay for rent. When a person owns a home, there are also maintenance costs, emergency repairs and taxes that need to be paid on the home. Prior to this there is also an issue of a down payment on the home, closing costs and other expenses that need to be factored into the home's overall purchase.
Give Home Ownership a Trial Run
Assuming that a budget has already been made and a person knows how much house they can afford, the next helpful tip is to establish a separate savings account for several months prior to actually beginning to shop for a home. Whatever the mortgage amount is that can potentially be afforded, after the normal month's rent is paid, subtract that amount from the total assumed mortgage amount. For instance, if a person normally pays 1,000 per month and has decided that they can afford a $2500 monthly mortgage, after paying rent, subtract that 1,000 from $2500 and put the remaining $1500 in a designated savings account each month.
Adding Up the Cost
The next step in buying a new home is to calculate the costs for other expenses, such as gardening, increased utility costs and association fees, if applicable. If after five or six months a person is able to faithfully do this on the same date every month, they may be ready for homeownership. On the other hand, if this presents a financial strain or if payments are late or if money ever needs to be borrowed from the designated savings account in order to pay other bills or emergency expenses, this is a good sign that a person is not yet ready for the responsibilities of home ownership.
Buying a new home is a great investment for some and a debt trap for others. Calculating all of the responsibilities of property ownership, as well as all additional expenses, before negotiating a mortgage is good financial wisdom. A person approaching home ownership in a realistic manner is one who is equipped to make a sound decision on whether or not to purchase a new house.
Sources:
Biz.Yahoo.com, How to Tell if You Can Really Afford to Buy (accessed on March 12, 2010)
orman, suze. Ask Suze About Real Estate. New York: Riverhead Books 1/1/, 2007. Print.
Laura M. Sands - Writing has always been my easiest and most prized form of self-expression. I have a variety of different interests and am pleased with ...
