Are you ready to buy this home?
Are you ready to buy this home?
Are you ready to buy this home?

Shoes, clothes, and the latest electronic gadget may be acceptable impulse purchases, but buying a home requires careful planning and informed decision-making.

Whether you’re a first-time homeowner or a repeat buyer, purchasing a new home is a personal and financial undertaking that requires the support of an experienced team of professionals: a realtor, lender, and an attorney, to name a few.

Why Do You Want to Buy?

The personal part of the buying decision comes into play when you consider why you want to move. First-time buyers typically want career stability and plan to live in the same community for up to seven years. They want to establish roots in a neighborhood and decorate their home freely, without having to take a landlord’s restrictions into account.

Buying a house is a lifestyle-related choice. You need to think about how you like to spend your time and the type of community you want to call home. Do you prefer a rural location without close neighbors, a city high-rise, or a home within a planned community that has recreational amenities? The more you understand what you really want in your future home, the easier it will be to make a decision.

Home ownership can also be a strong way to increase your personal wealth, as you’ll be building equity in the property as you pay off the mortgage.

Are You Set Up for Home Ownership Financially?

While you may not be able to afford your dream home right away, you can prepare for home ownership the moment you earn your first paycheck. When applying for a mortgage loan, you will need good credit, a record of saving money and paying your bills on time, and a maximum debt-to-income ratio (gross monthly income compared to minimum recurring debt payments) of 43 percent. A lower debt-to-income ratio increases your chances of a loan approval.

There are currently loan programs with low down payments of 3.5 to 5 percent, and some programs require zero down payment, but you will still need money to cover closing costs, moving expenses, a deposit, and post-purchase cash reserves. Saving money and keeping your credit in good shape are essential steps in future home ownership.

What Can You Afford to Buy?

Property and rental prices vary from one place to another, but rent vs. buy calculators are available to estimate the cost difference between your current rent and buying a home. Buying a house can cost even less than renting in some markets. It’s important to remember that homeowners have additional costs such as insurance, property taxes, and association dues. Home affordability calculators can help you estimate what a home will cost you. You should also consider your future plans, how you spend your money, and how comfortable you are with the concept of mortgage payments. While a lender can tell you how much you can borrow, they won’t know how much you spend on travel or hobbies or that you are considering a reduction in your working hours when you have a family.

Once you’ve carefully considered the personal and financial ramifications of owning a home, your next steps should be to find an experienced and reliable realtor to guide you through the property search and acquisition processes and to meet with a lender who can discuss your financing options.


About the author

Tom Ashworth

Tom Ashworth

- Realtor

Tom is a hard-working real estate agent with Central Metro Realty in Burnet Texas. He specializes in first time home buyers, helping sellers save money and helping buyers find their dream home in the Texas Hill Country area. Tom draws on his knowledge of the Central Texas real estate market, communities and local contacts to find clients the property that truly meets their objectives. Tom lives in Burnet Texas and enjoys outdoor recreation and billiards. Tom can be reached at (208)830-7991. Horseshoe Bay Texas.

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