How Long You Plan to Live in the Home
You have been prequalified, and now you are ready to start looking for a new home. Before you make that huge life changing purchase, you’ll want to consider a few important things. First thing is how long you plan on living in the home. Are you coming to an area on a job transfer and only plan on spending a few years at the location? Are you deep rooted into the area and plan on staying there for many years?
If you are only planning on staying in the home for a few years, you may end up having to pay to sell your home when you relocate. The value of your Antelope Valley home may not have appreciated enough to cover the selling expenses on what you purchased the home for as well as the cost to sell the home.
The appreciation of your home year after year will depend on various economic factors in the area of where you purchase your home. On average, homes in the U.S. see a 5% appreciation per year. Some areas see a higher rate and some lower. Currently in the Antelope Valley we are seeing a 10% increase year after year, but we can’t rely on those numbers to continue this pattern long term. In any case, you should plan on staying in your Antelope Valley home for 3 to 4 years in order to cover the purchase price and cost to sell. If the housing market is in an economic upturn, then it may not require you to stay as long. However, if it is in a downturn, then you may need to plan on staying in your home longer.
Feel free to shop Antelope Valley Real Estate any time. Call us at 661-860-1339 to speak with a real estate agent about your needs. If you need a lender to help determine your purchase power, we can help there too. Check out the complete guide to buying a house in the Antelope Valley.
How Long the Home Will Meet Your Needs
Many people make the mistake when they purchase their first home of only looking at their current needs, and not looking to what they may need in the future. Take a look 5 years from now… a two bedroom, one bathroom home may be perfect for the newlyweds. BUT, will the home fit your needs in five years after you make that decision to grow the family? A 6 bedroom, 4,600 sq.ft home may fit your family perfectly now, BUT the two oldest are leaving for college soon and this may turn into too much space in the near future. When you are looking for a home, remember to look at what the next 5 years may hold for you and your family.
Your Financial Health – Your Credit and Home Affordability.
It is no secret that buying a home is a huge commitment. You have to look at your financial health in order to determine if it makes sense for your family to purchase a home. Would you rate your financial picture as healthy? How is your credit score? You may be able to find a lender to lend you money for a home purchase without perfect credit, but is it the best idea right now? When lenders look at potential clients they will look over their credit history. If they are a higher risk candidate, they will balance the higher risk with a higher interest rate. If you are lower risk, you will generally get a lower rate. It may pay off to wait a few months to purchase a home so that you can get your credit and finances in order.
Some say that you should refrain from borrowing as much as you qualify for because it is may be wiser not to stretch your financial boundaries. The other school of thought says you SHOULD stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. In the end, this is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it’s within your comfort zone.
You need to speak to a lender to determine how much you can afford and what you will be comfortable spending monthly. You can go online and use a “Home Affordability” calculator to get a reasonable range of what your payment for your next home may look like, but it is always best to call a lender. They will be able to give you more realistic numbers and offer different programs for home purchases. When purchasing a home, one of the most important things you can do is know what your options are, and what those individual options look like financially for your family.
Where the Money for the Transaction Will Come From
There are two major expenses when purchasing your home. The first of these expenses is the down payment required by the lender. The down payment varies depending on the loan type you are using. A conventional loan may require 20%, 10%, 3% and some as low as 1% down. FHA loans are typically 3.5%, and VA loans do not require a down payment. Remember, the more you put down, the lower your payment will be. It is imperative to talk to a lender to see what options are available to you and your family. The second expense is closing costs. An average transaction will require close to 3% for your closing cost. They vary based upon time of year and lender, but a 3% closing cost will put you close to the amount you will need to close on your new home. When purchasing a home you can always request on the contract that the seller help towards your closing cost. This is a great way to get into a home without paying a large sum of money up front.
The Ongoing Costs of Home Ownership
Your monthly mortgage is not your only payment when owning a home. Maintenance, improvements, taxes, and insurance are all costs that are added to owning a home. If you buy in gated communities, condominiums, townhouses, or some other areas, you may have a monthly homeowners associations fee. Most of the time these fees, taxes and insurances are compounded into your mortgage and you pay only one monthly bill. However, these can add up quickly and make your payment higher than you first thought. It is important to be aware of the taxes and added fees in an area before you start looking and fall in love with a home that you unfortunately may not be able to afford. If you are still unsure if you should buy a home after taking all of this into consideration, you may want to consult with an accountant or financial planner to help you ultimately assess how a home purchase fits into your overall financial goals.
FIND A HOME!
Check out this complete guide to home buying!