If you plan on being in the area for five years, you love the home and you’ve done a budget to really assess all the costs of homeownership, then buying a home right now is a good idea.
There are tips that may help other prospective homebuyers work toward that big-ticket goal.
1. Prepare for monthly home payments in advance
One of the ways to be in the best financial position to purchase a home is to save.
And that goes beyond just the down payment. For example, if you are paying $2,000 a month in rent and you will be spending $3,000 a month once you buy a home, you should try to put away an extra $1,000 a month so taking on the cost of a new home won’t surprise you.
You should also work on improving your credit score, which will put you in the best possible position to get a good rate on your mortgage.
That means reducing utilization of your credit cards, watching your spending and looking at your credit report to correct any inaccuracies, if necessary.
2. Anticipate unexpected homeownership costsOne of the benefits of buying versus renting a home is the ability to have fixed costs. But homeowners still need to anticipate surprises.
With many cities increasing property taxes, prospective homeowners would be wise to anticipate those costs going up.
Additionally, they should anticipate paying for landscaping, furnishing and unexpected emergencies such as a pipe bursting.
Make sure you have enough liquidity to handle those additional expenses as a homeowner.
3. Look for flexibility on your purchase
Though home prices and interest rates are high, there are still possible ways prospective homebuyers can cut costs.
By getting a shorter-term mortgage — say, for 15 years instead of 30 years — borrowers may access lower interest rates.
Homebuyers may also want to consider buying points on their mortgage, which can let them lock in a lower interest rate.
Prospective buyers who have lower incomes should explore their city or county websites for homeownership or down-payment assistance programs.
As homebuying incentives start to come back, such as with closing costs, be sure to ask if there are opportunities to reduce the overall price of the home at this time.
Call us at (480) 205 2234 to get more information on current mortgage rates.
