Dear Moms,
**Musings from my mind that May help you!**
I'm a huge fan of homeownership. Owning a home can actually prove to be cheaper in the long run than renting in many parts of our country. I have been working to purchase a home for about two years now, and I finally feel ready! However, owning a home is not for everyone. It's often a game of chance. A game in which you spin a wheel and hope for no whammies, ie bankruptcies, leins, floods! Oh yeah, you forgot about that, huh?!
Here are MY biggest signs you may not be ready to buy your first house —just yet.
When you rent a home, the rent payment might go up over time, but this is the only "unpredictable" cost you have to worry about. When you own a home, you have to do your own maintenance, or pay somebody else to do it for you. You have to cut your own grass, fix your own plumbing, paint the outside of the house, etc. Plus, there are the big-ticket items that need to be replaced every now and again like water heaters and furnaces!
And let's face it- even if you are not a homeowner yet, you KNOW those things aren't cheap!! Especially, when you weren't expecting the expense anyway!
As a rule, the "experts" (those talking heads online and tv) say that you should set aside 1% of the home's value each year to cover maintenance expenses, but is not necessarily always adequate in the way of coinage!! Then, if possibly having to replace the furnace in January weren't enough... you still have to deal with property taxes, homeowners' insurance, and maybe even HOA fees. These amounts tend to change over time, say that bond issue passes... Let's just say these situations are usually not in favor of you, but the schools, or lakes and rivers! Yay?
Now, I'm sure you're saying something like, "Well my mortgage is gonna stay the same so, HA!" Lol, is it really? Granted, a fixed rate mortgage payment probably would stay fairly consistent over time- interest rates may fluctuate over time and cause some flutters.
One of my best reasons not to buy a home is if you're unsure about where you'll be in a few years. I live by a "____ year plan" system. I am always on a new phase of a 3,5, or 10 year plan. But, maybe your job's not stable. Maybe you're single, and you want to get married and have kids in a few years. You could be married now and headed for divorce... Or, maybe you just like a change of scenery every so often. Buying a home is really not worth it unless you're going to be there for a few years — those "experts" say at least three, and preferably more.
The reason I repeated this "fact," is that real estate has regularly appreciated in value by 3-4% per year. (See, I told you I've been doing my research!) Now, being realistic, let's assume your home's value will increase by 3% annually.
Did you know when you buy a home, the real estate commissions are paid by the seller? They are generally equal to about 6% of the selling price. But, wait there's more...lol That 6% is in addition to other basic expenses of selling — like the staging of the house, that fresh coat of paint your realtor recommended, and so on. Sooooo, if you own your house for less than three years, there is a damn good chance you'll lose money!
Yes, you can buy a home with less than perfect credit, but that doesn't always make it a good idea. The traditional go-to option for fair/poor credit is an FHA loan, but those bad boys have high mortgage premiums — both upfront and throughout — that you can't drop for the entire life of the loan. Egad!
If your FICO score is greater than 620, you should be able to get a conventional mortgage, but your interest rate isn't likely to be great. According to myFICO.com, a borrower with a score of 760 or above (excellent credit) can expect a rate of about 3.38%, as of this writing. With a 620, the rate bounces up to 4.97%. Now- not a HUGE difference, but over thirty years, interest does add up! I have less than perfect credit, and have looked in to lease to own options on "as is" property. The initial investment is relatively low, (usually about $1,000-2,000 for "turn key" quality)and you maintain monthly payments similar to regular rent payments toward the principal. Oh, and being able to do any necessary repairs yourself makes the other costs substantially lower! (Always practice Due Diligence, checking for outstanding property taxes, leins, etc.) Thank God, I'm handy!
When determining how much of a mortgage you can qualify for, lenders take two main pieces of information into consideration -- your income and your other debts. Most lenders nowadays limit your mortgage payment plus your other debt obligations to 45% of your total income, and that's only if your credit and employment situation is good. Traditionally, the maximum debt-to-income ratio lenders like to see is 36%. So, if your debt is consuming like a third of your income...it's really going to put a strain on your budget. Nobody wants to get in over their heads financially, especially when it comes to a place you've decided to call home.
I'm not a homeowner yet, but I am on the way to the financing round of my personal game!! Yaaay! Lol Having said that, I'm a huge supporter of the idea that most people should aspire to own a home... eventually. But, if now isn't the right time, don't rush into it. Take a page out of my book, do your homework, learn to understand the math, get your credit score together, and then SPIN THE WHEEL!!!
Until Next Time!
**Musings from my mind that May help you!**
I'm a huge fan of homeownership. Owning a home can actually prove to be cheaper in the long run than renting in many parts of our country. I have been working to purchase a home for about two years now, and I finally feel ready! However, owning a home is not for everyone. It's often a game of chance. A game in which you spin a wheel and hope for no whammies, ie bankruptcies, leins, floods! Oh yeah, you forgot about that, huh?!
Here are MY biggest signs you may not be ready to buy your first house —just yet.
- You don't want to worry about maintenance, repairs, and other costs.
 |
| Sacramento Home Repairs 916-472-0507 www.sacramentohandyman.com Retrieved: April 5, 2016 |
When you rent a home, the rent payment might go up over time, but this is the only "unpredictable" cost you have to worry about. When you own a home, you have to do your own maintenance, or pay somebody else to do it for you. You have to cut your own grass, fix your own plumbing, paint the outside of the house, etc. Plus, there are the big-ticket items that need to be replaced every now and again like water heaters and furnaces!
And let's face it- even if you are not a homeowner yet, you KNOW those things aren't cheap!! Especially, when you weren't expecting the expense anyway!
As a rule, the "experts" (those talking heads online and tv) say that you should set aside 1% of the home's value each year to cover maintenance expenses, but is not necessarily always adequate in the way of coinage!! Then, if possibly having to replace the furnace in January weren't enough... you still have to deal with property taxes, homeowners' insurance, and maybe even HOA fees. These amounts tend to change over time, say that bond issue passes... Let's just say these situations are usually not in favor of you, but the schools, or lakes and rivers! Yay?
Now, I'm sure you're saying something like, "Well my mortgage is gonna stay the same so, HA!" Lol, is it really? Granted, a fixed rate mortgage payment probably would stay fairly consistent over time- interest rates may fluctuate over time and cause some flutters.
- You don't know what your life will be like in a few years.
 |
| To Predict the Future, trust Your Feelings, www.io9.com Retrieved: April 5, 2016 |
One of my best reasons not to buy a home is if you're unsure about where you'll be in a few years. I live by a "____ year plan" system. I am always on a new phase of a 3,5, or 10 year plan. But, maybe your job's not stable. Maybe you're single, and you want to get married and have kids in a few years. You could be married now and headed for divorce... Or, maybe you just like a change of scenery every so often. Buying a home is really not worth it unless you're going to be there for a few years — those "experts" say at least three, and preferably more.
The reason I repeated this "fact," is that real estate has regularly appreciated in value by 3-4% per year. (See, I told you I've been doing my research!) Now, being realistic, let's assume your home's value will increase by 3% annually.
Did you know when you buy a home, the real estate commissions are paid by the seller? They are generally equal to about 6% of the selling price. But, wait there's more...lol That 6% is in addition to other basic expenses of selling — like the staging of the house, that fresh coat of paint your realtor recommended, and so on. Sooooo, if you own your house for less than three years, there is a damn good chance you'll lose money!
- You have shaky credit.
 |
| Bad Credit Repayment Calculator, Compare Poor Credit Loans www.mortgagecalculator.com Retrieved: April 5, 2016 |
Yes, you can buy a home with less than perfect credit, but that doesn't always make it a good idea. The traditional go-to option for fair/poor credit is an FHA loan, but those bad boys have high mortgage premiums — both upfront and throughout — that you can't drop for the entire life of the loan. Egad!
If your FICO score is greater than 620, you should be able to get a conventional mortgage, but your interest rate isn't likely to be great. According to myFICO.com, a borrower with a score of 760 or above (excellent credit) can expect a rate of about 3.38%, as of this writing. With a 620, the rate bounces up to 4.97%. Now- not a HUGE difference, but over thirty years, interest does add up! I have less than perfect credit, and have looked in to lease to own options on "as is" property. The initial investment is relatively low, (usually about $1,000-2,000 for "turn key" quality)and you maintain monthly payments similar to regular rent payments toward the principal. Oh, and being able to do any necessary repairs yourself makes the other costs substantially lower! (Always practice Due Diligence, checking for outstanding property taxes, leins, etc.) Thank God, I'm handy!
- Your other debt is too high
 |
| Debt Consolidation Programs in Haverford, Pennsylvania www.freedebtconsolidationquotes.com Retrieved: April 5, 2016 |
When determining how much of a mortgage you can qualify for, lenders take two main pieces of information into consideration -- your income and your other debts. Most lenders nowadays limit your mortgage payment plus your other debt obligations to 45% of your total income, and that's only if your credit and employment situation is good. Traditionally, the maximum debt-to-income ratio lenders like to see is 36%. So, if your debt is consuming like a third of your income...it's really going to put a strain on your budget. Nobody wants to get in over their heads financially, especially when it comes to a place you've decided to call home.
I'm not a homeowner yet, but I am on the way to the financing round of my personal game!! Yaaay! Lol Having said that, I'm a huge supporter of the idea that most people should aspire to own a home... eventually. But, if now isn't the right time, don't rush into it. Take a page out of my book, do your homework, learn to understand the math, get your credit score together, and then SPIN THE WHEEL!!!
Until Next Time!
Comments
Post a Comment