Buying A Home: When Is The Right Time?

Humanity has come a long way since the time we lived in caves.

Back then, we simply had to find a cave that didn't have a bear inside of it, and we owned a home.

Now, it's a bit different.

There's a whole process and lots of different people involved in the home purchase event. There are also a lot of questions that will need to be answered, such as what are my homeowner's insurance costs going to be, how much do solar panels cost or where should I go to get my loan.

In this article, we will discuss what it takes to purchase a home.

Buying A Home

How do you know when it's the right time to settle down and purchase a home? Is it when your bank account has the zeroes needed to put a hefty down payment, or when your kids have begun to drive you crazy inside of your two-bedroom apartment?

This answer varies depending on the individual or family's situation, but there are some guidelines to follow before even thinking about purchasing a home. Below is a list of these guidelines, and what they entail:

• Credit: In order to get a good mortgage (unless you're buying in cash) you must have good credit. There is no way to even be considered for a home loan without having good credit. Lenders want to know that they will be repaid, and a history of late payments, collections, and other events that appear negative, can have a huge impact on your loan and you may even get denied for a home loan. A rule of thumb is to have a credit score above 700 which is considered “good” credit. Anything above 750 will put you in a very good spot in the lender's eyes.
• Job Security: Another thing that mortgage companies want to make sure is stability in your job. They don't want to know that you've had six jobs in the last six months. This shows irresponsibility, and a lack of commitment. If you're going to keep paying a mortgage for fifteen to thirty years, they want to know you're a stable person and can keep a job for more than two years.
• Down Payment: Before applying for a mortgage, you need to make sure that you can put down at least 25% of the price of the home. This will ensure you get a better rate, and that your monthly payment is as low as it can be. The less you put down, the higher your monthly mortgage payment will be, and the higher your interest rate will be.
• Savings: Remember we were talking about job security. If you've had a few jobs in the past two or three years, you can give some security to the lender by letting them know that you have a large savings account. If you don't, you may have to wait a few more years to accumulate it.
• Proper Knowledge: Buying a home is much more than just “buying a home.” It may be a month's income for the realtor, it may meet a mortgage broker's quota for the year, and it can be a great investment as well. For these reasons, you need to have the proper knowledge about escrow companies, title companies, realtors, contracts, negotiation, and the fine print of your mortgage contract. The aforementioned professionals can all help you with this, but it is always smart to triangulate with other professionals to make the best decision possible.
• Market Trends: In the previous passage we mentioned how a home can be an investment for some. Market trends can cause this investment to increase and create a good return if you were ever to sell, or it can put people underwater just like it did in 2008. You must project your home's value into the future because you do not want to be stuck with a mortgage that is more than what the home is going to be worth in five to ten years.

There are many important items to think about before purchasing a home. These include knowing as much as possible about the home buying process to prevent problems, projecting future values and trends inside of your market, having a stable income, and good to great credit.

When everything is in place, you can begin to build the home of your dreams.