If you’ve been spending a lot of your spare time driving around in the neighborhood looking at houses for sale or browsing online real estate listings, you may feel it’s finally time you buy some property of your own. But is it?
Make sure you’re ready to pull the trigger with these financial planning tips.
A House Costs More than Its Sales Price
Buying a house is expensive, and not just because of the price tag on the property itself. It’s important to not bite off more than you can chew. Even with an affordable down payment, you’ll still have years of mortgage payments to worry about, as well as maintenance, renovations, and repairs, utility bills, moving expenses, and more.
Then, of course, there are the closing costs: application fees, lawyer fees, realtor fees, appraisal fees, etc. Using a buyer closing costs calculator can help you get a fuller picture of what you’ll be paying. Bonus tip: you may want to look at a seller closing costs calculator, too, as the current homeowner may expect you to pay a portion of their closing costs as well.
Your Credit Score Affects Your Mortgage
You know your credit score is important, but do you know why? It’s surprising how many people go their whole lives without even peeking at their credit rating. That’s a problem, because credit reports can sometimes contain mistakes that will actually make your life harder, such as incorrect identification information and multiple listings of the same debt, or sometimes even listings of debts that have already been paid off.
Why does this matter? Because there are virtually no reputable lenders in existence who are willing to provide you with a mortgage without checking your credit score first. What they see can have a big impact on what they’re willing to offer you, or not offer. That’s why it’s a good idea not only to check your credit rating, but also take steps to improve it as much as possible.
Sometimes Renting is the Better Option
Homeownership is the dream for countless people all over the world. The thing about dreams, though, is that while they’re certainly worth chasing, if you’re not careful you could end up following them right off a cliff. In other words, don’t let your desire to buy a home cloud your objective view of the situation. Always look before you leap, and don’t ever take that plunge until you’re ready.
Sometimes, now just isn’t the right time to become a homeowner. Sometimes, you need a few more years to get your debts under control, improve your credit score, build up your savings, and increase your income. Until then, renting—or depending on your age, living with your parents—is often the wiser, more affordable option.