Its a new year. Things are going to be different this year! You have set goals for yourself, your family, and your career. But there is one thing that is still bugging you.
You feel like you are still throwing money away every time you write out that rent check.
“I could be building equity in my own home, not having to live in this crowded apartment building, and not having to worry about the rent going up, again.”
If this is you, now could be the perfect time to buy your first home!
1. 2.93% APR
Rates can’t drop much more than that for a 15 year fixed rate mortgage! Many analysts think that the rates will be increasing in the next 3-12 months. Why didn’t I quote the 30 year rate? Because you should stay away! Not only is it a point higher, but you will end up paying a LOT more in interest charges over the life of the loan. And besides, who wants to be in debt for 30 years?
2. Weak housing market (at least in CT)
Home prices are still down, but the market is improving! This could be unlike any other time in history or the future for prepared homebuyers! Opportunity favors the prepared!
3. You’ve lived in the area you want to buy in for a while
Learn from my mistakes, don’t pick an area to buy in until you know the area a bit. Where will you be spending your time? Are there areas you want to live at a distance from? Close to? Where do you work and socialize? If you live too far, you can end up feeling isolated, or end up spending more in fuel than you anticipated driving all over.
4. You have a down payment saved
After the housing debacle a few years ago, it’s almost impossible to get a 0% down loan (a few options, such as VA, are much more expensive than conventional loans); most banks require at least 10%, but 20% is still the magic number!
5. You are debt free
And I mean all debt (including so-called good debt)! Becoming debt free is a much higher priority to reaching financial peace then owning a home. Once your income is freed from the burden of debt, you can maximize it’s wealth-building capabilities, including building equity in a home.
6. You have a fully funded emergency fund
When you own a home, you are liable for ALL maintenance and repairs! No landlord to call at 4 am when the heater quits in February! You need to have that 3-6 month reserve to cover whatever Murphy throws at you. Also, what happens if you lose your job? You’ll still need to pay the mortgage!
Now how do you determine how much house you can afford? It’s a very simple calculation; no need to find an online calculator. Don’t spend more than 25% of your after-tax pay on a 15 year, fixed rate mortgage. Being house poor is no fun, better to have a modest home and money to spend, invest, and give.
When figuring out your payment, don’t forget to include property tax and homeowners insurance! Depending on where you live, those can add $400-600 a month to your payment!
Not ready to buy yet? Lets develop a plan and get you ready, together!