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5 Things to Consider Before Purchasing a Home
When it comes to purchasing a home, there are a lot of things to consider.
Below are five important factors you should take into account before making your decision.
Do I have the financial means to purchase a home?
Before purchasing a home, you should definitely consider whether or not you have the financial means to afford one. It’s easy to look at the homes for sale and think that you can afford them, but it’s important to remember what your regular monthly payment will be when factoring in your interest rate. According to the Consumer Financial Protection Bureau, the average new mortgage payment in America is $1,009– that’s not including taxes or insurance.
Before making any purchases, you should sit down and figure out the cost of your monthly bills versus your monthly income. If the numbers don’t add up, it may be a good idea to hold off purchasing a home until you can save more money.
Is now the right time for my family and me to purchase a home?
If you’re considering purchasing a home, you should also consider the state of real estate in your area and whether or not it would be an excellent time to buy. Generally, now is a good time for first-time homebuyers to purchase since interest rates are so low and many homes are on the market. However, if you’re buying in an area that’s fancier than where you currently live (i.e., if you’re living in an apartment now but are buying a home where the average cost is $700,000), then it may not be the right time for you to buy. Your mortgage payment must be roughly equivalent to or less than what you currently spend on rent each month.
How much will my property taxes be?
Make sure you familiarize yourself with the local property taxes in the area where you’re considering purchasing a home. Property taxes are one of the biggest expenses homeowners have, so it’s essential to be aware of your total annual property tax bill.
What are my closing costs?
Typically, when purchasing a home, there are a lot of closing costs. Before making an offer or agreeing to buy a new property, you should make sure that you know exactly what your closing costs will be– both the ones you’ll be responsible for (i.e., your down payment and any other fees related to getting the loan) as well as the ones your realtor or broker will pay. It’s essential to understand the total costs of the purchase before agreeing to make an offer.
What are tax exemptions for homeowners?
Before purchasing a home, you should also look into any possible tax exemptions that may apply since property taxes are usually deductible on your federal income tax return (as long as you meet all of the requirements). Generally, homeowners who own their home and live in it for at least two out of the five years before filing their taxes can take advantage of this deduction.
Contact a tax professional or financial advisor to learn more about tax exemptions that may apply to your specific situation.
Summary
There are many things to consider when purchasing a home, but by taking the time to think about each of these five factors, you’ll be in a much better position to make an informed decision. After reading this article, don’t hesitate to reach out for more advice if you’re still unsure.