The following survey can help you determine if now is the best time for you to buy a new home. For each question, choose the answer that comes closest to matching your current situation.
I've reached that time in my life when I should be a homeowner.
I've done my homework and this is a good financial decision for me.
I want to own a home, I am ready to take on the challenges, and I'll get more for my housing dollar than renting.
A. If you are buying a home because you think you are supposed to, or because you are trying to impress someone else, walk away. Home ownership is often challenging and sometimes downright frustrating. Things that go wrong seldom do so at a convenient time and often cost more than expected.
B. If your primary objective is to make money on an investment, you need to compare real estate to numerous other options. Real estate investors regularly buy homes for long-term investment purposes (earning money on the rental income), but if you plan to occupy your home, you're looking at an entirely different set of numbers.
C. If you want to own a home, are prepared and willing to make any repairs, and you've done your research to be sure it will be a sound financial decision, then now might be a great time for you to buy!
A. If you have been in your current job for less than a year, you may not have enough financial security to purchase immediately. New hires are often the first to be "let go" if a company needs to trim back.
B. If you have been in your current position for three to five years and feel secure about your current income, then buying a home may be a good choice for you, assuming your other considerations align with home ownership.
C. If you have had your current job for over five years and your employer is stable, you should find it easier to get a mortgage and to feel confident that you'll stay in your current location long enough that buying a home is a sound decision.
How long do you plan to keep your current job?
I'm sending out resumes now.
I'd like to change jobs within the next year.
I'm planning to stay put for several years.
A. If you are currently seeking a new job, this is probably not the best time to buy a house. In particular, a job change during the mortgage application process could make it more difficult to obtain a loan.
B. If you plan to change your job within the next year, you may want to hold off on buying a home until you have had the opportunity to secure that new job and determine if it's a long-term position for you. Additionally, you may find opportunities outside the current geographic area that will be harder to accept if you already own a home (unless you plan to lease your property for rental income).
C. If you are happy with your current location, love the area where you live and feel that your long-term job is secure, this may be an excellent time to buy a home!
How do you feel about the area where you plan to buy?
I am anxious to learn about it. It's all brand new!
I've done quite a bit of research and I'm looking forward to the move.
I've lived here for a while (or lived here before) and it feels like the right area for me.
A. If you are new to an area, it may be better to initially live in a rental property. Settle in and get to know your new town, city or area before locking yourself in.
B. Research is great! That includes spending time in various areas at different times of the day and night, so you get a much better idea of what it would be like to live there.
C. If you are, or have been a recent resident, you're already familiar with the area and know which neighborhoods offer the best fit with your needs. If you're confident you'd be happy living there, buying a home may be the next logical step.
I have no idea what my credit score is.
My credit is ok. I had one issue with a loan/debt, but it's been resolved and I've checked my credit report to confirm this.
I have excellent credit and I safeguard it by requesting a free credit report every year.
A. If you don't know your credit score, you need to find out (and possibly fix any problems) since your score has a major impact on your ability to secure future loans. You can request a free credit report from all three major reporting agencies (Experian, Equifax, TransUnion) once a year, free of charge by visiting www.AnnualCreditReport.com.
B. If you have had an issue in the past, and it's been resolved, you still need to get annual credit reports and possibly take steps to improve your score. Higher credit scores will help you secure a better mortgage at a lower rate.
C. If you are staying on top of your credit reports and have protected and improved your credit score, you should be proud! Having a great credit score puts you in a much better position to purchase a home, typically at a lower mortgage rate.
How long do you plan to own the home, once you buy it?
Less than a year. I'm going to flip it and move on up!
Probably three to five years.
A. "Flipping" homes can be a great way to turn a profit if you are careful, knowledgeable and have enough money to invest in the project. It can also be a great way to lose your backside (financially speaking) if you are planning to "wing it" or hire contractors to complete the work.
B. Owning a home for three to five years is usually not a wise financial move since this probably doesn't provide enough time for any increase in the property's value to offset your closing costs. Also, most of your early mortgage payments are applied to interest, rather than principal. If you sell before you've paid down any of the principal, you may not enjoy any profit on the sale of the house.
C. If you are planning to stay put, buying a home will help you build equity, especially in the later years of your mortgage, when payments are increasingly applied toward the principal, rather than interest. You may even want to make additional mortgage payments to help pay down the principal sooner, shaving months or years off the life of your loan and saving you hundreds or thousands of dollars.
How important is the school district?
It's marginally important. I might have kids someday.
It's extremely important. I have kids now!
A. Even if you never plan to have children, you should consider the quality of the school district where you plan to buy because it will have a strong impact on resale value.
B. If you plan to have children in the future, buying a home in a good school district may mean you'll decide to stay put once the children come.
C. If you have children, you already know how important good schools are to parents and prospective buyers.
Are you buying your first home as a financial investment?
Yes, buying a home is going to be my primary financial investment.
I'd like to make a good choice, financially, but that's not the main reason I want to buy.
I don't want to lose money on a house, but I'm buying to have a home and to be in control of my home environment.
A. In past generations, the home was considered the most valuable and substantial financial investment an individual ever made. Property still plays an important role in wealth creation, but it shouldn't be your only strategy.
B. It's smart to recognize that buying a home is part of a bigger picture and represents only part of your investment plans. Buying stock may create more wealth, but you can't live in that investment.
C. If you want to own a home to be in charge of your residence, to be able to make changes without asking permission, and to actually OWN the place where you live, then you have excellent reasons to buy a home.
Do you have funds for a down payment?
No, but I'm willing to investigate other options.
Yes, but it's going to wipe out all my savings and the mortgage payment will make it difficult to replenish that nest egg.
Yes, and I am willing to purchase a house that will leave me some money at the end of the month for savings and unexpected expenses.
A. There are numerous options to buy a home with a 3.5 percent down payment. However, make certain you understand the higher costs associated with a lower down payment before deciding if it still makes financial sense to proceed.
B. If you wipe out your savings to make a 3.5 percent down payment, the good news is that you will probably eliminate mortgage insurance, which substantially lowers the cost of your loan (and your monthly payment). This may provide the cushion you need to help replenish your savings account over time. However, be very careful about stretching yourself so thin that you won't be able to handle any substantial unexpected expenses over the near term.
C. If a 3.5 percent down payment makes life too financially restrictive, it's better to consider a less expensive house that will still achieve your goals. Your home should meet your current living and financial situation so you can have the house you want without sacrificing the life you have.
How do you plan to find your house?
I'm looking for fixer-uppers and for sale by owner homes to get the best deal.
I'm calling a real estate agent with listings that appeal to me.
I'm engaging a buyer's agent to help me navigate the process and to be my advocate.
A. If you are looking for a "diamond in the rough" you may be in for a painful surprise. For sale by owner homes are not a short cut and fixer-uppers aren't a "hobby" for someone who lacks the skills or a serious desire to learn.
B. Looking for listings that appeal to you is a great place to start! But remember that the listing agent represents the current owner of that property and will protect the seller's best interests. So, instead of calling the listing agent, retain your own buyer's agent first.
C. Engaging a buyer's agent means you will have someone who has your interests as their main objective. If you are a first-time buyer, it's particularly important to have someone with experience to help guide you and protect your interests throughout the process.
If you have mostly "A" answers, you may want to wait before trying to buy a house. You probably have some preparations to make before you will be in a position to negotiate for a house and/or a mortgage.
If you have mostly "B" answers, you are probably close to being ready to buy a house, but there are a few details you still need to address.
If you have mostly "C" answers, this may be a great time to purchase your home!
Ready to start the home buying process? Contact Michael Vargas today!