Regardless of how ideal the market may seem, it’s still a good idea to sit down with your real estate agent and think about how you see your life in three or five years and ask yourself some pointed questions.
Buying a house will have a significant impact on your finances, so make sure you can handle it. Housing is more affordable than ever and incentives like low-interest rates and the new tax credit are enticing buyers to enter the market. But purchasing property involves a lot of upfront costs: closing costs, down payment, new furniture, moving expenses. There are rural development loans where you do not need a down payment coming with a .5% higher interest rate, however, with interest rates being low, these loans are becoming very popular.
Create a budget for the monthly mortgage payment and homeownership costs, such as general maintenance. Am I mortgage-worthy? Say you saved enough cash, but what about your credit? It’s not a secret that getting a mortgage these days is harder than it used to be. Lenders are looking closely at all documentation of your income, debts, assets, and liabilities, to make sure you don’t exceed the maximum debt-to-income ratio. And when it comes to credit scores, the most competitive interest rates (the 3.75 percent you may have heard about) only go to buyers with credit scores above 700. The key is to review your financial situation before you check out open houses. Use our affordability calculator to see what kind of monthly mortgage payment you can comfortably afford.
Most personal finance experts say that unless you plan to live in a home for at least five years, you likely won’t recoup any of the expenses associated with buying and later selling the house. Plus, your first few years of mortgage payments primarily pay off interest, not your principal, so you will not have built up a lot of equity in your home. You may be better off renting if you expect to move in the next couple of years. Just because you live in a buyer’s market doesn’t mean the time is right for you to buy.
You may be spending slightly more than you wanted to, but, in the end, it was worth it because the appliances stay, the kitchen is remodeled and it’s a house that you will not outgrow in a few years. In other words, the place in which you live is an investment and the money will always be relevant, but that old-fashioned moniker “home sweet home” is decidedly modern these days. People aren’t buying houses anymore; they’re buying homes.
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Shippy Realty and Auction is a Winner Realtor & Winner SD Auctioneer that lists, auctions, and sells land, residential, and commercial real estate.
We also provide land management.
All information provided is deemed reliable but is not guaranteed and should be independently verified.