There’s no place like home. Even better, there’s no place like a home you own. Not only is it an investment, but a means of self-expression and a way to establish roots. However, home ownership involves much more than getting a loan and making a monthly payment. From a financial perspective, home equity is usually an individual’s largest single source of wealth. Building a nest egg involves paying interest and principal as well as making improvements to your property. Proper research prior to purchase will also ensure a profitable investment.
Become an Expert
Your home will probably be your single largest investment. It would be silly to buy a car, a boat or a new stock offering without doing some research, and the same goes for a home. What are the trends in the neighborhood? Are prices rising? How are the schools rated? Is it close to a freeway access for easy commuting? Is shopping nearby? You need to decide what is important to you, and what will be appealing for resale. Also look into zoning. You don’t want the lot next door to become the city’s newest sewage treatment plant.
Love at First Sight
According to the National Association of Realtors, the average buyer spent 12 weeks searching for a home in 2012. It’s easy to become emotionally attached to one of the first homes you see, but take the time to do your homework. Many properties have virtual tours online, and taking a drive around a neighborhood will pay off in the end. Leave love at first sight to fairy tales.
Becoming a Landlord
When you make the transition from renter to owner, you become the landlord. Chances are you will become the landscaper, decorator, and exterminator too. If the plumbing breaks or the roof leaks, the buck stops with you. There is and endless stream of “honey-do” lists with a new home, so budget accordingly. Affording a mortgage payment is only the beginning.
Examine Your Finances
The bottom line to home purchases comes down to dollars and cents. You’ll need somewhere between 5% and 20% of the purchase price for a down payment, and then an additional sum (maybe 5%) for closing costs. You’ll need to establish a budget for home upkeep and repairs. Some experts recommend that a quarter of your monthly income should be devoted to a mortgage payment. That should leave enough for car payments and other bills.
We’ve got tools on our website to help you make the decision between owning and renting. To discuss these options with a Mortgage Loan Officer, give us a call at 804-897-3700.