1. What's Your Psychological State?
A. Is it better for me to rent or to buy?
All things held equal, it makes more sense to buy than rent for the tax benefits and equity building. However, home owner responsibilities; such as home and lawn maintenance, potential HOA fees, insurance, etc. should be thoughtfully considered before buying a house.
B.Should I wait until I'm married before I buy?
If you can afford a home with your current income, there are many reasons to buy single. The major reason is to build equity now to buy a better home that matches both of your criteria later on. With the First Time Homebuyer credit, low interest rates and smoking deals, you may not get another opportunity to buy down the road like you do today.
C. What if I don't want to live in one area forever?
Real Estate is NOT a liquid asset. If you're not certain where you want to live in 6 months, you should probably not be buying today. However, real estate is a great investment if you buy right, and can definitely be something that you make money from by renting out or selling later if you want to move somewhere else in the future. If you're looking to live in the area for 2 or more years, you may benefit from buying today.
2. What's Your Financial State?
A. How much of a down payment do I need?
2. What's Your Financial State?
A. How much of a down payment do I need?
There are a lot of local lending programs above and beyond the potential $8,000 credit, and the 20% down rule-of-thumb doesn't have to be a blockade to buying. There are some programs that allow little down, so know your options before you write off the prospect of owning a home because you don't have $20K in the bank.
B. How much can I afford?
Not only should you speak with a lender, you should talk to your accountant or financial planner. Even if your salary is enough to pay for a $1,500 mortgage; your debt, student loans and new car payments may decrease the amount you can actually afford. Mortgage calculators are a great indicator, but speak to a professional before looking at hundreds of houses that could potentially be out of your budget.
C. When my stocks and homes in the area are losing value, why buy now?
Buy low, sell high! Now is the time to buy for larger returns in the future. Like all successful investors say, you make your money when you buy the home. No one can guarantee when the market will hit rock bottom, so if you're waiting for a better deal, chances are you'll miss your opportunity. And with interest rates near an all-time low, there's no better time to lock in your rates.
Steps to Get Started:
A. Brainstorm: Think about where you'd like to live, style of home, school systems, and any other important factors that will play into your buying decision.
B. Contact an Agent: In 99.99% of the time in Colorado, the buyer's agent's services are paid by the seller. So get an agent! They will advise you, negotiate, organize and manage the deal at no cost to you as the buyer. The most important thing to look for in an agent is someone you trust and feel comfortable speaking to. Find someone you enjoy being around. Even new agents have a ton of resources and help from office leaders, so experience is often times less important than the working relationship you have with someone. If you feel awkward or uneasy asking questions or calling an agent, don't work with them. They will be unable to help you to the fullest and your experience and purchase will be negatively affected.
C. Speak to a Lender: Most lenders are more than willing to educate you on your options, share tips in the process, and most importantly, calm your nerves! Buying a home, especially for the first time, is a huge purchase and often a big source of stress. It's often as scary as it is exciting, and a good lender can help take a lot of the uneasiness away. If you don't know a good lender, speak to your agent for recommendations. If you're looking to buy in the next few months, get the mounds of paperwork out of the way. Speak to your lender about getting pre-approved now and speed up the process later.
