For most of us, an important ingredient of the American Dream, is, owning a home of their own! However, especially, with the high price/ costs of housing, in many areas of this country, a wise buyer, begins this journey, as well – prepared, as possible, and, to do so, must pay keen attention, to many related factors! This article will focus on one of these, which is to understand, some of the personal financial considerations, and reduce the potential stresses, of this transaction process. As a Real Estate Licensed Salesperson, in the State of New York, for more than 15 years, I have witnessed, some of the dangers, of being, not as prepared as one should be. With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 personal financial considerations, which have an important impact, on achieving one’s objective.
1. Downpayment: Although, one can purchase a home, with a mortgage, with less than the usual downpayment, the best – terms, rates, etc, usually, require 20% – down, for an owner – occupied property. With the price of today’s real estate, however, this, one – fifth, often, creates a significant obstacle! For example, this means, a $500, 000 house, would require, at least, $100, 000, etc! Without, the combination, of a plan, and personal discipline, etc, how can one achieve this?
2. Reserves: The lending institution, often, requires, several reserves, in order, to ensure, one, is qualified, for a mortgage. In addition, it makes little – sense, to become, house – rich, but cash – strapped, and unprepared for many of the eventualities, of owning a home. Some of these reserves, should include: preparing for repairs; potential renovations; temporary loss – of – income; real estate tax increases; change in employment, and/ or, job status; and, unexpected/ unanticipated expenses/ expenditures.
3. Credit worthiness: The better one’s credit, the easier the process. Either, personally, get a copy of your Credit Reports, to ensure they are accurate, and positive, or, employ, a professional, to assist you, well, in – advance, of beginning your home – search. Take the necessary measures, to improve your overall, credit worthiness!
4. What can you afford comfortably?: Focus on buying, a home, which, both, meets your needs, as well, as you are comfortable, in terms of affording, the associated costs, both, immediately, as well as, on a continuous basis! Know, and understand, your personal comfort zone, so, home ownership, is a pleasure, instead of a potential, nightmare!
5. Contingencies/ emergency funds: Prepare for contingencies, financially, and emotionally, because, there usually, are some obstacles, and challenges, involved, along – the – way! Before buying, be certain, you have a plan, not only for the obvious expenses, but, for the many contingencies!
Are you ready, to be prepared, to buy, that home, of your dreams? Be a wise, buyer, so you get the most, out of this process!