What is the largest financial responsibility you can take on? Is there a bigger financial decision than buying a home? A car mortgage lasts for about five years. Paying off a credit card can last for a couple of years. But buying your first home? That will take at least 15 years if you choose a short-term loan. Some apartments take 25 years to be paid off. Can you imagine being tied to a financial responsibility for such a long period?
If you are ready to file an FHA loan or any other kind of loan, make sure you’ve asked yourself a series of questions. These questions are designed to determine if you’re ready for the long-term financial responsibility of paying off your home mortgage. Also, you should be reminded that owning a home is more than just living in it, designing it, and paying for it. Being a homeowner means you’re responsible for the maintenance of every nook and cranny of that house.
Are My Finances in Order?
How many loans are you still paying? How much credit card debt do you have? The fact is, even if you lie to yourself, the lender will eventually find out. One of the requirements to be approved for any loan is your credit history. Your credit score and history will show the loans you’re still paying off, as well as if you’re a good credit card payer. The more loans you have, the higher the interest rate will be on your mortgage.
Do I Have the Money for the Down Payment?
Today, you can buy a home for as little as a 3.5% down payment of the total price of the house. On average, that’s roughly $7,000 to $10,000. Do you have that money or are you going to loan it from somewhere else? It’s not a good indication to not have money for the down payment because it means you haven’t actually saved enough to buy your own home. And you can’t empty your bank account, too. You need extra money for a lot of other things—insurance and maintenance, for example.
Can I Afford the Monthly Amortization?
The mortgage payment is not the only thing you have to worry about monthly. You’ll spend on your gas, car maintenance, clothes, food, utility bills, homeowner’s association fees, and property taxes. Can you really afford to pay a monthly mortgage of, say, $1,500? Do you have that money right now or are you just hoping things will be better in the coming months?
Do I Plan to Stay Here for a Long Time?
Are you committed to staying in that city for the next 15 years or so? A house is a long-term investment. What will you do with it if you suddenly decide to move to another city or country? Do you know how much work it is to sell a house, especially one that’s still on a mortgage? If you don’t plan to stay there for at least five years, don’t jump into the homeowning bandwagon yet.
Can I DIY Things Around the House?
Remember what was said earlier? You have to spend on the maintenance of the house. That refers to major things such as the installation of drywall and the repair of roof shingles. But for minor things such as fixing a faucet leak or assembling a cabinet, you might want to learn those things. That will save you a lot of time and money.
Ask yourself these questions before trooping to the bank. There’s no use applying for a loan and belatedly realizing you’re not for homeownership. These are the kind of questions you should ask yourself a hundred times before finally arriving at a conclusion.