Purchasing a home is exciting. From choosing paint colors
to finding the perfect corner for your favorite chair - it is a refreshing time to say the least. However,
cosmetics aside, there are some important questions you’ll want to answer
before even beginning the process. Continue reading below for five important
questions to answer before buying a home.
1. Are My Finances in Check?
Your financial situation is likely the number one
factor when determining if now is the time to buy a home. Crunching the numbers
between what your income is compared to what your monthly expenses are will
help you figure out what you can afford.
Not only should you have a steady and reliable
income, but you should have savings, both for a down payment and for a rainy day fund. Home ownership comes with
unknowns; water heaters and furnaces can break, your roof might leak, and you will need that cash
to help pay for these situations should they arise. Contrary to renting where
your landlord is likely responsible for things that go wrong, making sure you
are financially comfortable is important when buying a home to make sure you
have the means to make repairs along the way.
2. Is my Credit Score Adequate?
Similar to having your finances in check, your
credit score will likely determine to lenders
if you have a good payment history, or a payment history at all. Maybe you’ve
never had a credit card or bills in your name, these things matter to a lender
when looking into your payment history. Something as simple as having a household water bill in your name can help to
build your credit. Making sure your credit is in good standing will also help
you to get the best interest rate possible for a mortgage should you determine
it’s the right time to buy a home.
3. Am I Staying Here Long Term?
While for some it may be ideal to have your
money going toward your own investment monthly, for others it may not make
sense depending on their long-term goals. Asking yourself if you are planning
to live in a location for more than a few years will help you both financially
and stress-wise. Buying and selling a home is time consuming, and some lenders
can even restrict against giving a mortgage for a property that was already
sold within the last six months.
Another reason to consider the length of time you want to stay in a location is the housing market at the time of your purchase and sale. Giving yourself the buffer to wait for the housing market to be in your favor can help you financially down the road.
4. What Are Your Must Haves?
Narrowing down your “must haves” can help to
determine if now is the right time to buy a home. Do you want acreage, a garage, and a large footprint? Maybe you’re
more interested in condo living for added amenities? Writing down
your must-haves and comparing those to your budget can help to determine if now
is the time to buy or if you should save for a longer period to satisfy your
list.
5. How Do I Protect My Investment?
Perhaps one of the most important facets of
making an investment like buying a home is how you are going to protect it and the things inside. Homeowners insurance is required if you have a mortgage
on your home, but should be considered regardless, to make sure you are covered
should anything happen. Knowing you’re covered if a storm damages your home or if someone is injured on your property can make the
difference between an insurance claim and serious financial implications. Pro
tip: you might even be able to save money by bundling your home and auto
insurance policies together!
Should you decide now is the time, and you
find the right home, it’s important to sit down with an insurance agent to
discuss the property and get an adequate quote for the home. If now isn’t the
time to buy, an agent can also help you with finding a renters
insurance policy to cover you in the meantime! To find a local
insurance agent near you, click the button below!
