Ready to be a Homeowner?

A home may be the most expensive purchase you will ever make. Before you make a commitment, make sure you are ready. Avoid the pressure to buy a home you cannot afford. Here are some things to consider:

• Are you ready to be a homeowner? It is critical that you consider whether you have saved enough money to make a down payment in addition to being able to pay your other debts.

• You must have job stability and a steady income.
• How long do you plan on living in your home? Real estate is not always an investment that grows in value. No one can predict what will happen with your local housing market. If you plan to sell your home in the next few years, realize that the property may not increase substantially in value or may actually lose value. You may ultimately owe more to pay off your mortgage than your home will be worth.

• What is your estimated monthly payment for the home? In addition to the monthly payment for principal and interest, you will have to pay for taxes and insurance and possibly homeowner association dues. If your down payment is less than 20 percent, your lender may require that you pay the added expense for mortgage insurance.

• What are the other costs of owning a home? Be realistic about the costs of owning a home like heating and cooling and other utilities. You will generally need to budget for repairs and routine maintenance of your home, especially if you buy an older home.

• What can you afford? Be confident that you can make the monthly payments. Have a financial plan and make a budget. Do you have a steady source of reliable income to pay your mortgage should your interest rate or the cost of taxes and insurance increase in the future?

• Consider how many long-term debts you have such as car or student loans, as well as credit card bills.

Have you talked with a housing counseling agency? Housing counselors can be very helpful, especially for first-time home buyers. The U.S. Department of Housing and Urban Development (HUD) supports housing counseling agencies throughout the country that can provide free or low-cost advice. You can search online for HUD-approved housing counseling agencies in your area at the CFPB’s website at http://consumerfinance.gov/find-a-housingcounselor">consumerfinance.gov/find-a-housingcounselor or by calling HUD’s interactive toll-free number at 800-569-4287. After answering the questions above, have you determined that buying a house is right for you? If so, congratulations! Let’s start shopping for a house and a loan.

This post is courtesy of the Consumer Financial Protection Bureau and the American Land Title Association. For additional questions regarding the legal process of purchasing or selling a home, please contact Michna Law Group via phone at (847) 446-4600 or by email at BJM@MichnaLaw.com.