Purchasing a new home is a big undertaking. There is nothing like moving into a place that no one has occupied before. There is just something special about the fact that you are the only and sole occupant. But with it comes a huge responsibility. “Not only do you have a duty to make the on-time monthly mortgage payments, but you also have to personally attend to the home as well,” says Greg Covell, a real estate agent in Maple Ridge. Read on to find out what successful buyers have in common.
Stable Employment History
Not only is this important for you, but it’s also usually mandatory for the banks before they offer you the loan. During the housing crisis, banks were offering loans to consumers extremely loosely. Fast forward to today, and many require more documentation. But you should be policing yourself. If you have been employed by the same company for a few years, then you might feel confident enough to move forward with a home purchase. Someone who just recently started a new job might want to err on the side of caution.
A Fund for a Rainy Day
It’s bound to happen. Each of us has had a time in our lives when we found ourselves without a job. The question is are you prepared when this may happen? Hopefully, it never does, but if it does occur, you will be happy that you have emergency reserves. Professionals recommend varying amounts of savings. But the more the better. If you find yourself out of work but you have enough to cover a years worth of mortgage payments, then you are in good shape. You will have to determine if your in an industry that is at risk for layoffs or not. Plus take into account how long it may take you to find a new job.
A Sizeable Downpayment
One of the biggest oversights of the banks during the great recession was allowing homeowners to purchase a home without a downpayment. That was a disservice to themselves, as well as to the homeowners. Without a downpayment, the homeowner has nothing invested in the home itself. Plus you have to take into consideration that the initial payments on a mortgage are almost entirely interest as well. A homeowner without any equity in a home is much more likely to walk away. So come armed with a downpayment. Many professionals recommend at least 20%. But you can pay less.
Low Interest Rates
How low are today’s interest rates? Obviously, the lower the interest rates are, the more home you can afford. And the less interest you pay, the faster you can pay off your home. With interest rates still extremely low, now is a better time to make that purchase. If you look back into the 1980’s you will be shocked at how high rates were. It’s not uncommon to hear a potential buyer having to back out of a purchase because rates spiked before they locked in their loan. When rates rise, it may price you out of a neighborhood you desire. So keep your eyes open.
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