Most young people, newlyweds and young families dream of owning their own home. At the same time, the idea of buying your first home can also be pretty scary because it’s such a big responsibility. If you are trying to figure out if you are ready to buy your first home or not, here are a few tips to help you along.
1. Calculate an affordable payment. The Federal Housing Administration (FHA) generally uses the 43% debt to income ratio rule as a guideline for approving mortgages. This means that all your debt payments, including your new housing expenses (mortgage, insurance, property tax, association fees, etc) shouldn’t amount to more than 43% of your monthly gross income. If your mortgage amounts to that much, then you’re still technically in the “safe” zone, but realize that you will have little to know wiggle room for any other additional expenses. Life is unpredictable, and you may want to consider giving yourself more leeway budget wise for any unexpected non-debt related expenses.
2. Don’t buy a home (or anything, for that matter) based on future income. Again, life is unpredictable, and the raise you were counting on may not happen, or you may decide to change careers somewhere down the road, leading to changes in your financial situation. If you buy a home based on future income, you may end up being in stuck in a vicious cycle of debt for a very, very long time.
3. Plan to settle down, for real. If you can’t see yourself living in the same city for the next ten years, or if you don’t really have ANY solid plans for the foreseeable future, it may not be time for you to buy a house just yet. Owning a house is a long-term commitment. If you still want to go ahead and purchase a home without having a solid ten-year plan yet, you must plan to buy a house that is priced much lower than the maximum you can afford, so that you can afford to take a hit in case you have to sell it quickly.
If you are planning to buy a home, let The Incorvaia Team make the process as easy as possible for you. Call us at 440-879-7130 today!
