Whether you're a first-time homebuyer or a current owner looking to sell or refinance, the home-buying process can be long and complicated financially
and emotionally. It’s a big step, so you’ll want to educate yourself on the various financial implications of home ownership before you make an offer. When looking to buy your “Home Sweet Home,” consider these key questions:
- What are the pros and cons of owning vs. renting?
Studies show the average buyer expects to live in their new home for 13 years before selling, so for most, it’s a long-term commitment.
Educate yourself on the costs and benefits of owning a home before you make an offer.
- Am I ready for the responsibilities of homeownership?
While property is generally considered an appreciating asset, home values are tied to economic conditions. Are you confident in your ability to pay your bills on time? Are you able to budget for unanticipated costs?
Evaluate questions like these to determine whether you’re ready for the responsibilities
- How much home can I afford?
Deciding how much home you can afford goes beyond the list price of a property. Other factors that will affect your monthly payment include interest rates, taxes, insurance, income, debt, and future monthly expenses – just to name a few.
It’s important to understand the whole picture.
Before you buy, determine how much home you can afford.
- How will lenders evaluate my mortgage readiness and make loan decisions?
Are you familiar with the “Four C’s of Loan Credit?” Lenders look at factors such as character, capacity, capital, and conditions to determine the terms of a mortgage loan.
Consider reviewing your financial history and educating yourself on the qualifications
that lenders use to determine the terms of your loan.
- How will my credit score impact my ability to buy?
Your credit score and the information in your credit report are key factors in whether you’ll be approved for a mortgage and at what interest rate. When was the last time you checked your credit?
Learn more about your credit, and the steps you can take to build strong credit.
No matter what stage of homeownership you’re exploring, learning more about the process will help you make a long-term decision that benefits you.
Visit RCU’s Financial Wellness Center to discover more about home ownership. There, you’ll find articles, videos, and podcasts, created to help
you navigate your home-buying journey.
This article was developed as part of Redwood Credit Union’s partnership with EVERFI, Inc.