Considering Home Ownership
Even though building starts fell in July, builders are starting to feel optimistic about the housing market. Indeed, much of the optimism is coming from first-time homebuyers rushing to take advantage of the $8,000 tax credit for buying a home this year. And, that $8,000 can be used right now in order to help make a down payment. The incentives for buying are strong, and many are getting ready to take advantage of what is offered.
But just because there are great inducements to buy a home, it doesn’t mean that you should rush out and get one. A home is still a large purchase and a large commitment. It is vital that you understand what you are getting into, and that you can afford it. Green Panda Treehouse points out that some of the considerations you must acknowledge before buying a home include:
- Homeowner’s insurance
- PMI, if you don’t put 20% down
- Homeowners Association Fees, where applicable
- Property taxes
- Maintenance and improvement
These are things that must be considered on top of the principal and interest payments that come with a home mortgage loan. Additionally, you need to determine whether you can really afford a home. While most gurus recommend that you spend no more than 30% of your income on housing expenses, it is probably wise to try and keep it to 25%, just to be safe.
If can’t really afford home ownership right now, it is probably best that you continue renting and save up. The good news is that home prices are likely to remain reasonable for a while, and if you prepare properly you can still get a pretty good mortgage loan interest rate.
Green Panda Treehouse offers this excellent advice:
Don’t just assume that buying a home is better than renting. You have to run the numbers yourself. Spreadsheet templates are an excellent solution to running the numbers easily. Find out and don’t just fall into the common myths of homeownership.
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