Buyer Seller

Think About Buying Your First Home?

Many renters are starting to think about purchasing a home of their own. Several factors should be
considered when purchasing a home:

How long you plan to live in the home.
If you purchase a home and get a job transfer or decide to move after only a short time, you may end up
paying money in order to sell it. The value of your home may not have appreciated enough to cover the
costs that you paid to buy the home and the costs that it would take you to sell your home.

The length of time that it will take to cover those costs depends on various economic factors in the area
of the home. Most parts of the country have an average of 5% appreciation per year. In this case, you
should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area you buy
your home in experiences an economic up turn, the length of the time to cover these costs could be
shortened, and the opposite is also true.

How long the home will meet your needs.
What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending
on how long you plan to stay in your home, you'll need to ensure that the home has the amenities that
you'll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children.
However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a
home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic
be turned into a master suite? Having an idea of what you'll need will help you find a home that will
satisfy you for years to come.

Your financial health - your credit and home affordability.
Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy?
Is your credit good? While you can always find a lender to lend you money, solid lenders are more
skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make
you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple
of blemishes on your report, lenders like Quicken Loans may still provide you with a loan, but you may
just have to pay a higher interest rate and fees.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to
stretch your financial boundaries. The other school of thought says you should stretch to buy as much
home as you can afford, because with regular pay raises and increased earning potential, the big
payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you
in a position where you expect to make more money soon? Would you rather be conservative and fairly
certain that you can make your payment without stretching financially? Make sure that whatever you do,
it's within your comfort zone.

To determine how much home you can afford, talk to a lender or go online and use a "home affordability"
calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While
some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making
loans customized to a particular person's situation. The "28/36" rule means that your monthly housing
costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your
total monthly income. Depending on your assets, credit history, job potential and other factors, lenders
can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing
the higher ratios, its important for you to know your options.

Where the money for the transaction will come from.
Typically homebuyers will need some money for a down payment and closing costs. However, with
today's broad range of loan options, having a lot of money saved for a down payment is not always
necessary - if you can prove that you are a good financial risk to a lender. If your credit isn't stellar but you
have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk
to a lender.

The ongoing costs of home ownership.
Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house
payment. If you buy a condominium, townhouse or in certain communities, a monthly homeowner's
association fee might be required. If these additional costs are a concern, you can make choices to
lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit
these costs.

If you are still unsure if you should buy a home after making these considerations, you may want to
consult with an accountant or financial planner to help you assess how a home purchase fits into your
overall financial goals.

Info for Buyers