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Lesson 1: Planning
Am I really ready to
buy?
Buying a home offers many
advantages, one of the most significant being that it allows you to build equity
(ownership) when you pay your mortgage each month. A common myth is that monthly
mortgage payments are more expensive than rent. But, in many cases, mortgage
payments can be even less than rent. When considering homeownership for the
first time, you need to decide whether buying makes financial and practical
sense for you right now or if you are better off renting. Consider both the
advantages and disadvantages to renting as well as buying, and weigh the pros
and cons for your particular situation.
How much “house” can I
afford?
Home ownership is within
many consumers' reach. And the first step toward finding the right home is to
quickly compute your purchasing power and determine how
much you can afford to pay each month. This saves you time by allowing you
to focus on homes in your price range.
In addition, you should consider both
the up-front and ongoing costs associated with purchasing a home in the planning
stage:
Up-front
Costs:
- Down-payment: Typically
ranges from 3-30% of the cost of the house. The more you can put down, the
greater equity you will have in your home and the lower your monthly payment
will be. For down-payments less than 20% you may also need to pay mortgage
insurance.
- Closing
Costs: Typically range from 2-6% of the
loan amount depending on your area.
- On-going Costs: Your
housing costs can include the following:
 Monthly mortgage payment
Homeowners
insurance
Mortgage Insurance, if applicable
Flood Insurance, if
applicable
Property taxes
Utilities
Maintenance
Lesson 2 > |
It's an investment that you own and is yours to
sell.
