One of the biggest decisions you’ll make is purchasing a home. And just as important as deciding to buy a home, is the decision of WHEN.
When you buy a home, you’re investing in your family and your financial future. Where you live – whether it’s Phoenix, Scottsdale or somewhere in-between – influences many other important household decisions and your lifestyle, like what schools your children will attend, what amenities you’ll live near, how close you’ll be to your family and friends, just to name a few.
Needless to say, it’s a big decision.
Here are three things to consider before purchasing real estate, which could be one of the wisest investments you’ll ever make.
Rent or Purchase?
It goes without saying that you would rather make payments toward your own mortgage instead of your landlord’s. When you decide to buy a home, you gain the freedom of owning your own home and benefiting directly from your investment in both the short-term (tax relief) and long-term (added equity).
When you decide to buy, you’ll need to consider your long-term goals and cost comparisons. As a homeowner, you may be responsible for costs you’re not currently familiar with as a renter, including property taxes, mortgage insurance and maintenance or repairs on your home.
The rent-versus-buy debate is something most people go through in their lives, but before you make the jump, make sure that the time is right and carefully consider the short- and long-term payoffs of buying a home of your own.
Are you Financially Ready?
Buying a home is an investment. Investments are designed to provide stability and give rise to financial assurance for the future. However, you’ll need to be in the right place financially before taking this big step.
Before shopping for a loan product, try to get your savings to a healthy level. Consider having money for a down payment and closing costs. In addition, your monthly financial picture will change, so, you should prepare for new bills in addition to your new housing costs.
As a rule of thumb, you can strive to have your mortgage be no more than 28 percent of your pre-tax income.
Interest Rates in Current Market
Interest rates change based on the market, but it’s hard to say where they will be in six or 12 months down the road. Your decision to enter the market need not be based solely on market conditions. Luckily, with the proper guidance, you can level the playing field by making yourself an attractive buyer. This means getting your credit in order, saving enough for the costs of buying a home and planning your next move.
With the right preparation, you can enter the market with confidence and determination of landing the type home you are looking for.