Home Personal Finance Some things to Consider Before Looking for your First Home

Some things to Consider Before Looking for your First Home

by My Journey to Millions

Buying your first home can be an exciting, but often stressful time in your life. There are a number of factors to consider when making the decision to continue renting or to buy.  Your income can be largely consumed by your rent or mortgage so it is important to to make the decision that is best for your pocket book. Before making any decisions, consider a few important factors that are said to be key points in any decision that you should make about where you chose to ultimately live.

1. Low Credit Score

Your credit score speaks volumes about whether or not you will be able to afford a mortgage. A low credit score says to a lender that you are not necessarily responsible when it comes to paying back debts. If you have never looked at your credit score before, now is a good time. Errors on your credit score can be the difference between a good interest rate and a terrible one. If you find an error on your report, you can dispute it.

 2. Job Stability or Relocation

Job security is everything when it comes to where you end up living and whether or not it is a good idea to secure a mortgage. Although it is hard to foresee such things as layoffs always, establishing an emergency fund can prepare you for home ownership.

Home ownership works out to be a wise investment only if you intend to hold on to the house for a substantial perios of time. It is said that your property should gain at least 10% of its value if you want to come out even in a home sale. It is for this reason that you should only buy a home if you are going to stay in the home for at least a few years.

3. Maintenance fund

Home ownership is expensive, even after you have already closed and the keys have been handed over. In order to rule out any potential money pits, it is strongly advised that all homes undergo a thorough inspection by a licensed home inspector. Once potential problems in the home have been ruled out it is a good idea to have a maintenance fund saved in the event of repairs and upkeep that may need to be done. It is said that a maintenance fund of at least 5% of the value of the home is sufficient.

As you can see home ownership is something that needs to be looked over and examined before any decisions are made. Jumping into home ownership when you aren’t necessarily ready for it can be the cause of financial strife or even disaster.

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Erin 01/19/2014 - 4:56 pm

The more I think about home ownership, the more freaked out I am about staying in one place for the foreseeable future. I’ve got the credit score bit down, but I am nervous about saving enough for maintenance and qualifying for a mortgage, as I am self-employed and both my husband and I have irregular income!

Evan 01/22/2014 - 4:22 pm

LOL I feel like I will be wealthy despite home ownership NOT b/c of it lol

Andrew 01/24/2014 - 2:55 pm

Looking into buying a “home” which means co-op because I can’t afford a house in Queens. I guess I don’t have to worry about budgeting for maintenance as they have their maintenance fees. Though I don’t like dealing with a co-op board, I’m not sure there is another option if I want to buy. I’m also stressing out that mortgage rates will be jumping up and also real estate prices…Brooklyn prices are crazy and I think it’s leading many to Queens which might jack up the prices here too.

Evan 02/10/2014 - 11:07 pm

You should find out what maintenance covers. In my old condo (which is obviously different than a Co-Op: http://myjourneytomillions.com/articles/difference-condo-coop/) maintenance from sheet rock to sheet rock was on me. So I had a leaky pipe that was on me, but when the roof dripped it wasn’t.


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