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We’ve been doing a lot of talking this week about renting versus buying. How do you know when it is time to make the leap? Realtor® Sophia Delacotte of San Jose, California gives her five statements to test see if you are ready for home ownership:
1. You Have Enough For A Down Payment
You have been saving every month for the past few years and have kept your spending within reason, i.e. you have not felt the need to tap into your ‘home reserve to finance your new TV or your new car. Inevitably, as rivers merge into oceans, you have accumulated a small gold mine, at least to be taken seriously by a lender. The size of the house you can afford will obviously depend on your ability to come up with the required down payment. However, remember to ask your Realtor about options and incentives available to lower your down payment as low as 1% in some cases!
2. Your Credit Score Is Shining
As a result of managing responsibly your spending, paying down all or most your debt every month and in absence of derogatory marks on your credit record, you should be in a position not only to overcome today’s tighter credit requirements but also enjoy a preferred loan rate. The shorter the duration of your loan, the better the rate. If you can afford it, go for the 15-year mortgage rate which has reached new lows just over 3%.
3. You Found Your Realtor
Based on recommendations from your co-workers, your family and neighbors coupled with online searches focused on the Silicon Valley neighborhood of interest to you, you are ready to interview Real Estate Agents whose profile look promising. Remember, find the Realtor before the home. Avoid the multiple pitfalls of home purchase, understand the fine prints of the contract, become aware of the type of homes available on the market (e.g. short sales, foreclosures, REOs, etc) and above all buy in confidence with the help of a Real Estate professional. Remember that as a buyer, enlisting an Agent to represent you is completely free of charge.
4. You Have A Trustworthy Contractor
You should almost inevitably expect that the home you will fall in love with will require an uplift which can vary in scope depending on many factors ranging from the financial status of its previous owners, their willingness to invest in their home to sell, the age of the home, etc. Needless to remind you to enlist the help of a contractor to evaluate the work required to make it ready to move in according to your standards before signing anything or even making an offer. Ask your Realtor who will most likely be in a position to recommend a few contractors they usually work with.
5. Your Partner Is Pestering You
Last but not least, you have come to the self-realization that your partner (and your kids too) are right when he/she/they are making the case about planting roots, being able to remodel according to your wishes, building equity, taking advantage of records low rates and settling down while you can do it. Of course, let us not forget that all above-mentioned reasons pale in comparison with the fact that you are looking to take your love to the next level by fulfilling a common dream.
