We, so often, become, so emotionally involved, with the concept of home ownership, that, we overlook, and forget about, the necessary details, involved, in properly planning, for, buying a house. When one seeks a house, based on, meeting many needs, goals, and priorities, and considering, present realities, and foreseeable contingencies, he, generally, remains happy, with his decision. Since, for most of us, our house represents our single – biggest, financial asset, doesn’t it make sense, to be well – prepared, and fully plan, for the process? With that in mind, while accepting there are many emotional considerations involved (Why would someone want to live somewhere, which doesn’t make him satisfied or happy?), this article will attempt to consider, examine, review, and discuss, some basic essentials of financial planning, for owning a house, of one’s own.
1. Before you begin your search: The better you plan, the easier this process becomes! At least six months, before, you begin your search, either, personally, review your Credit Report, for accuracy, etc, or, consult a recommended, mortgage professional, and ensure, you optimize your credit – worthiness. The better, your credit, the easier the process, of getting the needed loan, as well as, qualifying, for the lowest possible, available rate. Remember, the lower the rate, you pay, the more house – for – your – dollars!
2. Down – payment, and closing expenses/ costs: Since most people, depend on financing (generally via a mortgage loan), you will need, to save, for the down – payment. Most conventional loans ask for 20% down (although some require less), and you must have these funds, liquid, and available. In addition, you will have to pay, a significant amount in closing costs, including, pre – paid real estate taxes and utilities, filing fees, title (title and title insurance), legal costs, etc.
3. Reserves: Will owning a home, of your own, be your American dream, or some sort of nightmare? When prospective homeowners, realize, and commit to the need, to maintain reserves, especially for: a) Unanticipated needs for monthly payments (6 – 9 months reserve is recommended); b) repairs (regular); c) major repairs/ unanticipated; d) maintenance; and, e) renovations, they experience a far lower degree of stress, and tension, during the home ownership experience.
A smart, well – prepared, homeowner, is far more ready, and able, to enjoy, the positives of owning, a home, of one’s own! Will you be a prepared owner, or, cause yourself, lots of extra, unnecessary stress and tension?