Owning a home is a great investment, but before jumping into the market it is extremely important for consumers to consider the costs involved and budget accordingly to ensure they’re able to meet all of their financial obligations.
BankWest encourages consumers to consider these questions before beginning their housing quest:
How much money do you have saved?
Start with an evaluation of your financial health. Figure out how much money you have for a down payment. Down payments are typically 5 to 20 percent of the price of the home. But be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs.
How much debt do you have?
Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income.
What is your credit score?
A high credit score indicates strong creditworthiness. Home buyers can expect to have their credit history examined. A low credit score can keep you from qualifying for a mortgage loan. If your credit score is low, you may want to delay moving into a new home and take steps to raise your score.
Have you factored in all the costs?
Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Find out if you will have to pay for parking or trash pickup. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. Factor in real estate taxes, mortgage and homeowners insurance and possibly a home owner association fee.
How long will you stay?
Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home. Carefully consider your current life and work situation and think about how long you want to stay in your new home.
If you’ve evaluated your budget and are considering purchasing a home contact one of our knowledgeable mortgage professionals to help you through the home buying process.
NMLS #685987 | All loans subject to credit approval