Buying a home is a huge financial commitment, and many first-time homebuyers don’t understand all the implications involved. From getting rid of debt and saving for a down payment to having enough on hand to deal with the inevitable repairs, there’s a lot to consider. Here’s how to decide whether to buy a home in Alpine, TX.
Can you afford a mortgage?
The biggest factor in buying a home is, of course, whether you can afford to do so. If you have enough money saved up to pay cash, you certainly can feel comfortable purchasing now. However, most people need a mortgage in order to buy a home.
Typically, your mortgage company will look at your credit, your debt-to-income ratio and how much you can truly afford. Mortgage brokers prefer to keep the front-end debt-to-income ratio at about 28 percent or less—after all, if you lose your job, have unexpected expenses or need major repairs, you don’t want all your disposable income going to a mortgage. Plus, since they’re usually 25- to 30-year commitments, you’ll also need to consider how reliable your employment is.
Getting pre-approved for a mortgage will give you a better idea of what you can afford.
Do you have a down payment saved?
The more of a down payment you have saved, the better—you’ll have lower monthly payments and interest rates. Experts suggest having at least 20 percent of the purchase price saved up. However, if this isn’t a possibility, there are other options. Ask your real estate agent and mortgage broker about other sources of financing.
How will you handle repairs?
As a homeowner, you’re financially responsible for taking care of your home—if you’ve been used to renting, this can come with sticker shock. What happens if you spring a leak or find out that there are foundation problems? What can you fix yourself, and what will you need to outsource? How will you pay for it? Don’t forget to factor in increased utilities, lawn care supplies and other hidden costs.
What does the market look like?
The housing market is another major factor in readiness. If it’s cheaper to buy than rent, you are likely making a smart decision in purchasing. You’ll also want to consider whether the market is appreciating and growing and how depressed real estate prices may be—a depressed market can mean that your bargain home will grow in value as the market rebounds.
Do you plan to settle down?
Finally, are you ready to settle down in one spot? Consider how steady your job is, your ties to the area, potential family planning concerns (especially if you’ll need extra bedrooms), whether you’ll be taking care of aging parents and other lifestyle considerations. Remember that if you sell your home before living in it for two years, you may be subject to capital gains tax.
If these tips for buying a first home in Alpine, TX have reassured you that you’re ready, contact Carpenter Real Estate to get started!