8 Financial Notions to Consider While Buying Your Next Home


Handling the Morgage

Decide whether you are ready to handle a mortgage payment. It is a heavy responsibility to have fees every month for your home. If you cannot control the payments, your new home will be foreclosed by the bank. Without a home, what will you do? In other words, consider whether you are fully committed and ready to make mortgage payments.

Unexpected Payments

Do you have sickly dependents upon whom you support? Will you always have enough money to make all your obligations after all responsibilities are made. Often it is easy to forget all the unexpected payments that arise in our life. Before you can commit to making a mortgage payment, you need to know exactly how much you can afford to put away every month for your debts. In other words, the money you will use for your mortgage would be money you would be putting away for savings, retirement, or a “rainy day.”

Property taxes, Maintenance

Before purchasing a home, you also need to consider all of the fees associated with having your own home. While you were renting or living with the inlaws, you didn’t have to pay for property upkeep and management. A property manager includes all upkeep expenses involved in the rental fee. Once you own a home, there are many upkeep expenses: lawn care, sewage, electricity, property taxes, insurance, security, plumbing, heating, and cooling. You will be the homeowner and responsible for all maintenance fees to the property.

What is your credit score?

The first information a bank will ask when applying for a home loan is your credit information? It is a general rule of thumb for bankers to expect no credit score lower than between 600-700. The lower the credit score, the harder it will be to obtain a loan. A loan at a lower credit rating than 600 could make the mortgage more expensive and nearly impossible to pay back over 30 years.

What is your job status?

Do you work in a job that has high security of remaining in business? Do you have a seasonal job, or is it permanent? How long have you stayed at your present job? What will happen if you lose your job? How will you make your mortgage payments? Do you work for a plant that may soon be closing? If you own your own business, how stable is its income stream monthly? By knowing the sources of your income better and their stability, you can offset any harmful consequences that possibly may happen over the next few years.

Who is your lender?

Have you approached any lenders for a home loan? How many? What did the lenders have to say? Have you discussed all the details of your home purchasing plans? Bankers and financial institutions have a good feel for what works and what will not work when lending their money for home purchases. You may need to look out for a tailored home cover for the purchase of your new home.

They will provide you one loan that will cover all of the fees that are associated with a home purchase. You cna aks your lender for a recommendation. However, bankers have helped hundreds or thousands to obtain loans and many they have had to turn down; usually they only cover the essential loan for the home leaving extraneous fees to the homeowner. Consider what the financial advisors tell you before you make you finalize plans for buying a home.

Down Payment?

Before purchasing your home, consider how much you can afford to put on a down payment for your home. Different banks will require from 3% to 10% down on the total cost of the purchasing price. This is a guarantee that the loan amount will be paid back with interest after the home purchases agreement has been finalized. Without a reasonable down payment, you cannot expect to obtain a loan.

Alone or Together?

Will you be paying the entire mortgage payment or will there be a Spouse or another person(s) helping with the monthly mortgage? What happens if the responsible mortgage holder falls sick do they have insurance that will cover the mortgage payments? If the person who is responsible for making the monthly mortgage falls sich and cannot work is there anyone else that can work who will make the payments? Can savings be used to make your monthly mortgage?

Fees for Closing the Home

There are many fees associated with the home broker and legal fees that will be charged for the purchase of the home. After the down payment and taxes are paid, do you have enough money to use for the other fees associated with the purchase of a house? For example, a closing fee may be between 3-5% of the total cost of the home. Even the price of a modest home of 100K could set back a family as much as $3-5K in closing fees.

There are also land taxes that will need to be paid, increased utility bills for the first few months, and insurance fees for your home. All of these fees will come in succession month after month and year after year, for as long as you own the home. These are financial notions you need to consider before you finalize your home purchase.

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