Guest Blogger #563, Entry #1278, June 12, 2012
Pretty much everyone would rather pay a mortgage than rent since the former will one day result in home ownership. But just because you have realized the folly of shelling out for rent each month doesn’t necessarily mean that you are ready to buy your own property. There are a lot of things you’ll want to consider before you take the plunge on this major purchase and you’ll probably need to put in some prep work before you will be approved for a loan. So here are some of the things you’ll need to take into account before you start perusing the mortgage market for properties and approaching lenders to secure the financing you’ll need to complete the transaction.
Are you ready for home ownership?
For starters, you need to think about whether or not you’re mature enough to own a home. Okay, so most people won’t admit that they’re too irresponsible for the demands of home ownership, but there’s no shame in conceding that you’re simply not ready to take on everything that comes with being solely liable for the state of a property. For example, did you know that you must keep a home up to spec when it comes to city codes? Just because you are the owner does not mean you can let the lawn become overgrown or throw trash bags all over your parcel. There are city ordinances in place to ensure the safety of all the residents in an area, and if you are creating hazards through your unwillingness or inability to keep your home clean and well-maintained you could get fined or even lose your house.
Suppose a fire broke out and you didn’t have proper brush clearance; what could have been easily contained has now become a serious risk to you and your neighbors. Of course, that’s just one example of how you might not be ready for the responsibilities involved with home ownership. Keeping your property clear of debris and looking nice for the safety of your neighbors and the value of your community is only one small part of it. You also need to engage in upkeep as a way to preserve your own property value so that this expensive asset can gain value over time, acting as an investment as well as a practical shelter. So if you don’t have basic handyman skills and you can’t afford to hire professionals to tend to the issues in your home, perhaps you’re simply not ready to own one.
Are you ready for the financial responsibility?
This brings us to the financial responsibilities inherent in owning a home, and here, too, you should be prepared. Although VA home loan requirements may allow veterans to purchase a house with no money down, civilians have no such options these days. This means you’ll have to come up with a down payment, which could be anywhere from about 3-30% of the asking price of the home. This number depends on the state you live in, the lender you choose, and your particular credit history. Of course, you’ll also need a decent credit score in order to get approved for a home loan, so if you have poor credit (or no credit), this is something you’ll have to work on before you even think of seeking a loan. If you don’t have a workable credit rating and a down payment in hand, this definitely isn’t the time to purchase a home.
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