Being a first time home owner is a wonderful and rewarding experience, but it is not exactly easy either. There is a vast difference between renting an apartment or house and purchasing a home. Getting a first-time buyer home loan, interest rates and upcoming property taxes take center stage as the new concerns instead of gathering previous landlord references and security deposits.
It is all a big commitment, and there are things people need to be aware of to make sure they are ready to purchase their first house. Some ways you can know if you’re ready for your first home purchase are:
You’ve done the Research
There are a few different options for home loans and each one requires the proper research. The first type of mortgage loan is a conventional loan, there is a 15 year loan, and there are special options available to farmers and veterans. Visiting with your local credit union or banking institution is a great way to research what type of mortgage best fits your needs. If home loans have been given proper study time then the hard part is out of the way.
You’ve Weighed the Pros and Cons
There a major difference between renting and owning a home. Renting allows far more freedom from responsibility, but there is a long list of reason for why owning a home is a sound financial move. The rewards typically come in the form equity and tax breaks, but there are even more factors. The list is quite long.
Your Credit Score Is Excellent
Excellent credit is always important whether someone is renting or buying, but it is especially important when buying. Trying to rent a place with bad credit is possible with large deposits and higher rent, but an attempt to buy a home with bad credit can result in the mortgage being denied altogether. On the other hand, a good credit score can score lower mortgage interest rates.
You Want to Take Advantage of Equity
Equity accumulation over time is one of the greatest benefits of buying a home. Equity turns into a type of savings account when the value of the home increases, and the amount owed on the home decreases. Growing equity can be used to secure loans, assist with tuition, it can be used for retirement or be used in emergencies like a bailout.
A starter home can be just as stressful as it is exciting. There is a lot to go over and commit to. Meeting the criteria of these five things is a great way to know if someone is ready to buy their first home.
About the Author: Dixie Somers is a freelance writer and blogger for family, home, and business niches. An expert on credit union home loans was consulted for the information included in this article. Dixie can be found on twitter @DixieSomers for any questions or comments.