Posted on: Monday, January 26th, 2015 // under Home Stretch, Framework, Homebuyer Education, Homeownership Education, Tips, Successful Homeownership, Homeownership, Homeownership Advisors Network, homeownership counseling, Homebuyer Services
Whether you’re thinking about becoming a homeowner for the first time or you’re coming back into homeownership following a foreclosure, buying a home is both a financial and emotional decision that requires preparation. The Minnesota Homeownership Center wants you to be successful when you step into homeownership. Here are three questions to ask yourself to see if you are ready for homeownership:
Homeownership is a big step and it shouldn’t be taken lightly. Before you think about anything else, the most important question to ask is: Is my lifestyle ready for this long-term commitment? Successful homeownership requires a level of financial stability (stable income) AND the desire to commit to living in the same community for at least five to seven years. You should want to establish roots in a neighborhood and be ready for the responsibilities of homeownership. When you buy, you become your own landlord. Repairs, maintenance and upkeep – and the costs associated with them – are your responsibility.
It may seem like an odd question to ask, but one of the most important aspects of successful homeownership is having a stable income that will allow you to cover the monthly mortgage payments and the additional expenses of ownership that you might not have had when renting. Some additional expenses may be minor, like replacing a furnace filter or the batteries in a smoke detector, but other expenses can be major, like repairing the roof or replacing a major appliance. Even a brand new home will require maintenance eventually.
Most lenders will require that you show two to three years of stable income either at the same job or at least in the same field before they’ll be willing to offer you a mortgage.
In addition to a stable income we talked about in #2, you’ll need to have your expenses under control. Good money-management skills are a must if you’re going to successful at homeownership. Lenders will want to see that you have a financial cushion (savings) and aren’t using every penny you have on the purchase of your home with nothing set aside for future unforeseen events.
Another aspect of good money management is keeping your debts under control. The more outstanding debt you have, the more difficult it will be to qualify for a mortgage – and the more stressful it will be day-to-day making both mortgage and debt payments.
If you’d like additional assistance with money management – or would like a non-biased overview of your financial situation to see if you’re financially ready for homeownership, speak with a Homeownership Advisor.
Even though we’ve already discussed the need to understand your financial situation and have good money-management skills, it’s important to understand how much you’re willing to spend on purchasing your home. A mortgage lender can tell you ‘how much home you can afford’ – or how much they’re willing to lend you, but that is not necessarily the amount that you’re comfortable spending on a home. They may not know that you love to travel, or want to save more to retire early or are planning to reduce your work hours once you start a family.
Once you’ve thought through the lifestyle and financial aspects of buying your first home, make sure you’re following the right path to successful homeownership.
Remember… if you have any questions about homeownership or your readiness, free, non-biased Homeownership Advisors are available throughout Minnesota to help!