What do I need to know?

Buying a home is something that you really need to prepare for. Whether it’s saving for a down payment or figuring out which neighborhood is the best fit for your needs. Right now, the housing market is starving for inventory. Law of demand comes into play making prices for current inventory inflated or slightly higher than they normally would be. If you are looking to purchase a place of your own this next year, here are some critical questions to consider.

 

1. Is my credit score good?

 

If you need a mortgage to finance a home, you should know that the higher your score is, the more likely you’ll be approved. Not only will you be approved, but you’ll receive a lower interest rate. Since home prices are higher than usual, you might need a lower interest rate on your mortgage to compensate.

 

2. Do I have a stable enough job?

 

It’s important to make sure you have a stable job before jumping into a large purchase like this. Thankfully, the economy is doing well and there are plenty of jobs out there. If you suspect an organizational change or some other unknown factor, it may be a good idea to wait and see what happens before purchasing a home. It’s also a good idea to make a budget and figure out what payments you’ll be able to afford with your current salary.

 

3. Can I afford the down payment?

 

You’ll want to put 20% down when purchasing a home to avoid paying private mortgage insurance (PMI). PMI can be costly and can stretch your budget every month. If you’re short on cash for a 20% down payment, finding an extra job or some other income source might be a great idea. You can also rethink the home you’re looking for and maybe find something a bit cheaper that can be renovated.

 

4. Can I afford the home of my dreams?

 

Don’t buy a home that you aren’t completely happy with. It’s a big investment so you need to be sure it’s a place that you can see yourself living in for a while. It’s not just a short-term investment. Not only does the house need to be something you like, but also the neighborhood, surround schools, and everything else should be up-to-par with what you want.