Are You Ready to Purchase a Home?
Buying a home is a huge step and there are plenty of things to consider. You want to make sure you can handle the mortgage, but you also want to make sure you’re making the right decision. Homes require more than just the ability to pay the mortgage.
Making an investment in a home means you need to be dedicated, willing to learn and ready to be a responsible homeowner. No longer will you just call your landlord when a problem comes up. It will be up to you to fix the issue.
How do you know if you’re ready to buy a home? Here are a few things to consider.
Will you be Staying in the Area for Many Years?
It doesn’t make sense to buy a home if there’s a good possibility you will be moving in the next three to five years, or even sooner. If your job offers you the opportunity to relocate for a promotion and that’s a strong possibility, maybe renting makes more sense, for now.
However, if you have a steady job, no plans of moving anywhere in the next few years and you’re happy in Miami, it might be time to buy a home. If you don’t stay for about 5 to 7 years, you may have to pay a prepayment penalty on your mortgage, along with a commission to the real estate agent selling your home.
It’s best to consider a home purchase only when you plan to stay in the area for 7 to 10 years or longer. Of course, we cannot predict the future, but if it seems like this will be a long-term move, buying a home in Miami makes sense.
Do You Know what you can Afford?
If you don’t know what you can afford, you may be looking at a pipe dream when it comes to buying a home. Maybe you’ve been looking around based on what you think the monthly payment will be, but you haven’t really looked at your finances or credit to determine what you can really afford. This can be dangerous.
It’s important to know what your budget will support without issue. You cannot just look at how much you’re paying in rent currently because other expenses come up with owning a home, which you don’t deal with when renting.
Your mortgage payment, including insurance, property taxes and interest, should never exceed 42% of your take home pay. It’s best if this number is much closer to 25% of your take home pay.
Do You have a Down Payment Saved?
An important part of buying a home is saving a down payment. You have to make sure you start saving early or you may never get enough saved. Sure, there are programs allowing you to put a small amount down, but the best mortgages come with 20% down or more. This is how you avoid paying for private mortgage insurance, as well.
Are you Pre-Approved for a Mortgage?
Before you start shopping for a home, you need to be pre-approved. This will tell you exactly what you can afford based on what the mortgage company is willing to lend you. Getting a pre-approved letter will answer all the financial questions for you and help to ensure you get the right home within your budget.
Do you Have an Emergency Fund?
What happens if you move in and a month later something needs fixed? Do you have an emergency fund to handle maintenance and emergencies around your house? Before you buy a home, you should have 3 to 6 months of regular bills saved up to give you enough for just about any emergency.
Have you Created a NEEDS and WANTS list?
Another important thing to do before you start searching for a Miami home is creating your needs and wants list. This is simply a list of what you need in a home, such as three-bedrooms, two-bathrooms and an extra room for a home office. Those might be needs, while a swimming pool, kitchen island and skylight may be wants.
Creating this list makes it easier to search for the right home for you. It will also cause you and your partner to discuss the possibilities and figure out what you really need and what you simply want in a home.
Are you Going into Home Ownership with Realistic Expectations?
Are you ready to put in the time, money and effort it takes to be a homeowner? Do you understand you will no longer get to just call the landlord when something needs fixed?
It’s all on you when you own a home. You will need to fix it yourself or call someone to fix it for you. You also have to foot the bill for all repairs.
Make sure you know what to expect before you go into buying a home. The last thing you want is to buy a home and find out later you really don’t like dealing with the maintenance and other issues that come with a home.
Along with going through these questions, you should have a basic knowledge of the Miami real estate market and have an idea of how to find the right real estate agent for you. If you’ve gone through these questions and you’re ready to buy a home, then it’s time to start searching!