With all the talk about great prices on foreclosures, and an $8,000 first-time home buyer credit being mentioned almost daily on the news, some people think it is time for them to buy their first home.
Before signing on the dotted line, do as much research as you can on home ownership. One of the major concerns for anyone who has not owned a house before is learning what the true monthly cost is for the four walls, roof, and ceiling they are about to purchase.
Before closing on your purchase, you will receive figures from your lender showing what your monthly payment includes. No doubt you are aware there will be an escrow account for future real estate tax payments, and home owner’s insurance, and that this money is part of your monthly obligation. Other costs that are not mentioned will be the expense of maintaining your home. It is easy to think everyone has these expenses, and they survive, so why worry?
What happens to new homeowners who have to replace a hot water heater the first month after moving into their new purchase, and a washing machine the following month? What if you need new tires for your car, or your transmission has to be replaced? Do you have enough money to keep your house if you lose your job?
With the state of our economy, a great deal on a house today could put you into tomorrow’s nightmare. If you are able to purchase a home for half of what it would have cost you last year, but your employer goes out of business, what happens to you, and to the house? Will you be able to manage payments without your paycheck?
There are many cases where couples have both lost their job, and been forced to sell their home, or have lost their home when their income ended. As there is no bail out for private individuals who come up short to meet their payments, you will need a plan to protect you. Do you have such a plan in place, and if so, is it realistic?
First time home purchases are often made by young people who do not have financial resources available should they have an unexpected major expense. If a person loses their job, and does not have a year’s income set aside to carry them through the tough times, where does the money come from to pay for the mortgage, and other payments typically made in a month?
Everyone wants to have a home of their own. This might be the perfect time for you to buy. Or, maybe you should continue to rent for another year while the market settles, and you learn answers to some of these important questions. Only you can make the decision for yourself. And when you do, do so with the knowledge you need to survive your choice.