With the amount of foreclosed homes, low home prices and low interest rates the housing market seems to have turned into a buyers’ market. At least according to realtors and economists. But a buyers’ market does not necessarily mean that everyone should buy. Buying a home is a big investment filled with a bunch of unknown future investments. Maintenance, natural disasters and accidental mayhem can all make a previously affordable home unaffordable. So, we are not say do not buy a home but you will definitely want to buy the ‘right’ home. One that will provide a comfortable environment for your family and not one where you have to worry about yet another home repair.
1. Your Credit Score is Low
Credit is designed to reward those customers who are buying a good or service now and will pay for it later (with your credit company trusting you to pay that money back when your next statement arrives). Those who have better credit are considered more trustworthy so they get better deals and loan rates. Those with a credit score under 700 are given very bad interest rates which can make buying a home unreasonable. Try building your credit score up above 700 before you consider buying. Those improved interest rates will make it worth your time.
2. Down Payment
Depending on your credit score and your available financial assets a down payment on a home can range anywhere from 5% to 20% of the total cost of the home. If you do not have the money to make the down payment you may still be able to get a loan. But it comes with a lot of risk. That second loan could incur higher monthly payments and higher interest rates which means you may be buying a home for a lot more than it is worth.
3. Previous Home Maintenance
The more you know, the more prepared you will be for future maintenance problems. Be sure to hire a home inspector to look for potentially bank-breaking home repairs. They will not be able to prevent all future home repairs but they will be able to address major problems (like a weak or unsafe foundation) before you make a payment.
If you have any further questions about buying a home please feel free to contact us at 212-777-7113. We look forward to hearing from you!