When making the decision to buy a house, you need to consider not just the type of home you want to settle in. If you’re switching to owning from renting, you need to assess your finances to make sure you can keep up with living in and maintaining the property.
Salt Lake City mortgage companies share the questions you need to ask yourself before pursuing your decision.
Can I afford the costs and payments?
If you’re financing the house with a mortgage, you’ll need to make monthly payments to pay off your loan balance. It’s ideal not to spend more than 30% of your income on housing, so you can pay other expenses and have some savings. If your loan payment will go over the said limit, it may be better to rent in the meantime.
Do I have other debts?
Debts, especially large ones, can impede your ability to make regular monthly payments. If you have other credit obligations, your debts — including your monthly mortgage payments — should not go over 36% of your gross income.
Is my credit score enough to qualify for a good interest rate?
A high credit score tells lenders that you’re responsible when it comes to borrowing money or managing debt. It can also make you an attractive borrower, with better interest rates on loans. Paying your bills late or going over your credit limit can lower your score. This can affect your chances of qualifying for a lower rate. If your credit rating is low, it’s best to improve it first before buying. A score of 750 or higher is considered as an excellent score.
Are there any other fees do I need to pay?
Owning a house is a financial responsibility with associated costs like maintenance, insurance, and real estate taxes. Homeownership, however, can give you tax benefits at the end of the year. It also allows you to build equity every month, which can increase over time if the value of your home increases or your mortgage balance is paid.
How many years do I intend to keep the house?
It makes more sense to purchase if you plan to stay longer on the property. If you don’t like the idea of settling in one place, however, renting is more practical.
Buying a house is an exciting and stressful time for many first-time homebuyers. Don’t let the stress and excitement keep you from making the right decision, though, especially in pursuing homebuying, getting the right loan, and choosing the most suitable house.