When Should I Buy A Home
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When Should I Buy A Home
The amount of time it takes to buy a house is different for everyone. Typically, the longest part of the process is shopping for a home, touring properties and deciding on the right one for you. Working with a real estate agent and knowing what you want and need in a property can help you find your perfect home a little faster.
Start by determining how much home you can afford. Play around with a mortgage calculator to get an estimate of your monthly mortgage payment at different home prices. You may also want to create a wish list that includes things you want and absolutely need in a home. This will make shopping for a property easier, and help you narrow down your search.
Once you have a rough idea of what you want in a home, get preapproved for a mortgage. Your lender will look at your financial documentation and tell you how much of a loan you can get, which can give you a more realistic idea of how much home you can afford. From there, you can work with a qualified real estate agent in your area and begin your hunt for the perfect home.
Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible.
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Renting gives you the freedom to move when you want, with none of the responsibilities of homeownership. But at some point, most people yearn for their own home. Buying a house is a good way to start building financial security. As you pay down the mortgage, you build up home equity, which is a valuable financial resource.
Although borrowers with a credit score as low as 500 can qualify for some home loans, they will be required to make bigger down payments and pay higher rates. A good credit score gets you better interest rates and loan terms.
Down payment requirements typically depend on the type of home loan you get. For conventional loans, 20 percent down is usually required if you want to avoid paying private mortgage insurance. Some mortgages insured by the Federal Housing Administration, known as FHA loans, require just 3.5 percent down. Fannie Mae and Freddie Mac back some mortgage products that require just 3 percent down; and loans guaranteed by the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture require no down payment at all.
Many renters decide to purchase a home after a major life event, such as getting married, says Henry Yoshida, a certified financial planner and CEO of Rocket Dollar, a Texas-based provider of self-directed retirement accounts. A growing family, a new job and children leaving the nest are other common catalysts for people to buy a home.
Buying a home involves a lot of upfront costs that can take a few years to recoup, so if you anticipate moving before you can recover those expenses, homeownership might not be the right choice for right now.
Ready to leave renting behind Before you start looking at homes for sale, shop ar