With the passing of years, your family has no doubt grown in number and in accumulated possessions. Your living space, however, probably hasn’t had the same flexibility to accommodate your family’s expanding proportions. From stuffed closets and items piled on every flat surface available to feelings of claustrophobia and a complete lack of personal space, your home environment may be telling you it’s time to expand.
There is perhaps no more important decision in your life than the one to buy a home. The decision to move from renting to homeownership is not one to be taken lightly. Your family’s interests, finances, and long-term plans and goals are all important factors to consider before making the decision to move from renting. For some families, renting is the ideal option. It offers a sense of flexibility and ease of mobility over owning and the “maintenance-free” aspect of renting is, perhaps, its major selling point.
For many however, the American dream of homeownership is an important goal in life. According to the U.S. Census Bureau’s Census 2000, 66.2% of occupied housing units were owner-occupiedindicating that two-thirds of Americans have decided that homeownership is the right choice for them.
If your family is ready to consider the big step into homeownership, take your time and do your homework. Time well spent early in the decision-making process will be beneficial in the long run. According to Fannie Mae, the nation’s leading foundation devoted to affordable housing and mortgage programs, there are specific positive and negative aspects to consider when making a decision to buy a home:
Another key item to pay particular attention to is your family budget. Dedicate time to sit down and take an honest and truthful look at where your family income goes each month. Don’t forget to account for the little things like that $2.50 cappuccino each morning before work (which adds up to over $50.00 per month or $600.00 per year!) or newspaper and magazine subscriptions. Pay particular attention, as well, to your credit card balances and whether you tend to pay them off immediately or carry large balances. There are numerous books and websites available with household budget templates that make the task a basic “fill-in-the-blank” procedure.
Guidelines from Fannie Mae state that, in general, a household should spend no more that 28% of its income on housing expenses and no more than 36% of its income on total debt obligations (including the monthly mortgage payment).
Once you have your budget figures determined, you might want to investigate how much house your budget will allow you to buy. Most banks offering mortgages typically have “calculators” on their websites, which are a great help in determining the appropriate housing price range for your family.
In addition, remember that your financial history is going to be a determining factor in a potential mortgage approval process. If you’re considering a home purchase in the future, now is the time to start taking steps to improve your credit rating. Check your credit rating and, if necessary, start taking steps to improve your score (i.e., make timely payments, get outstanding balances under control, etc.)
A comparative market analysis is a smart move once you find a home you are interested in purchasing. A CMA is an assemblage of recent home sales in a given region for a similar size and style of house. A CMA gives you a bit more reassurance that a home you are considering is priced within a realistic range for the neighborhood, size, and condition. Your real estate agent should be willing to provide a CMA for you and, if you are planning on a certain geographic region, you may want to do some research on your own to gauge if the area and type of home you’re interested in are within your budget. Typically real estate transactions (where a transfer of a property deed exchanges hands) are recorded at a county records office and are public record.
Owning your home is a rewarding and financially advantageous decision. Do your research, ask questions of experts, and make an informed decision that fits your family’s budget and long-term goals.
Articles are provided for the general interest of our readers. Gerber Life Insurance is not responsible for any content and recommends that you consult the appropriate professional with any questions or concerns you may have concerning any financial or health related issues.
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