One thing that many homeowners across the nation can agree on is that owning the roof over your head is simply a great feeling. For couples right here in Richmond and across the nation who have been renting forever, they may be very anxious to have a place that they can call their own, and make improvements to at will. When the boom and bust occurred a decade ago, it taught many out there that owning a home is not the “on autopilot” or thought and planning-free life choice that some perceived it as. The emotional and financial good reasons to own a home are many, but the added responsibilities can prove just a bit to think ahead about and set goals for.
Lending standards that are just a bit tighter, soaring home prices, and other issues of uncertainty can be to blame for the currently lower homeownership rate, but there are many great reasons to have us help you find the home of your dreams this year. We understand why some would-be buyers are standing on the sidelines currently, and are here for you if you have any questions at all about the process before you even go through the lending and mortgage process. At our last gathering around the office table before the busy week, we all weighed in on some of the important questions that you have to ask before you make the leap into owning your own home.
Are my finances generally in order? If you feel as if you are struggling to pay your bills, the choice to buy a home may be a bit steep and sudden. In an ideal case, you have perhaps saved at least 10% for a down payment. If your down payment is less than 20%, you’ll have to pay private mortgage insurance as well. During the financial crash of 2008, many were reminded about needing to prove the discipline and means to save money for this life event.
Will I be stationary for awhile? Some time ago, it was recommended to buy if you planned on staying for at least 3 to 5 years in the property. In the current market, transaction costs and the process is dictating a nearly 7-year window. When it comes time to sell and move on again, there will be commission for the agent and other costs on the exit end, and it usually boils down to around a five-year stay for the numbers to make sense.
Issues after taxes: If you feel as if you are solid financially and are ready to make a long-term commitment, you can then have an estimate of other costs that will arise. You can take the price of the home price minus the down payment you provided. and plug it into a mortgage calculator online to see how your area adds up for taxes and insurance. Mortgage interest and property taxes may be deductible, and when you sell down the road, you can absorb up to $250,000 in a sale before you owe actual tax on said gains.
What are other hidden expense? One issue that needs to be realized is that 4 out of 5 buyers of new homes, including condos and townhouses, can expect to pay fees for Homeowners Associations. This method of paying for amenities can actually add hundreds of dollars to what you can expect to pay each month. Sometimes there are projects that come up not covered in the regular budget, and other items such as fresh paint or a new roof may pop up, providing their own dose of extra expense.
What exactly is a local snapshot of the market? If you are renting, as the economy continues to improve, it is also a sure thing that rents will continue to go up. If you are renting, you can expect to spend about 30% of your income on housing, and this could perhaps be the biggest benefit of owning a house. Assuming that you will stay in place for a while, the costs you are shelling out will be pretty stable, and in time could even go down. For many buyers who were exploring owning for some time, that’s they main reason for them to get off the fence, and take the steps to get qualified for a mortgage.