Purchasing one’s first home, is, often, both, the fulfillment of the American Dream, as well as the responsibility, and obligation. Those considering becoming homeowners must realize, and recognize, it’s necessary and essential, to fully understand, and prepare, for the financial considerations, obligations, etc, which might be involved. When this is done, the possibility of enduring the dangers, many do, of becoming, house – rich, but so stressed, to make enjoying it, extremely challenging, are exponentially, reduced, and, thus, it makes sense, to proceed, with one’s, eyes, wide – open. With that in mind, this article will attempt to briefly consider, examine, review, and discuss, some of the ways, to proceed, smartly, from a financial perspective.
1. What can you afford?: Before you begin, sit, and seriously consider, in an introspectively, objective manner, what you can afford, and will be comfortable with. This differs, widely, from, individual – to – individual, and, therefore, everyone must examine, his personal, comfort zone! Some of the considerations should include: the down – payment; personal cash flow issues; and necessary reserves, which might be needed, in the future. Since most first – time buyers use a mortgage, to finance the house, they must recognize, most conventional loans, require 20% down, although, many mortgages, require less. However, remember, the less you put down, the higher your monthly expenses. Before you begin the search, be certain, your credit, will be your friend, and helpful, rather than making your life, more difficult and/ or challenging!
2. Reserve for life’s unexpected turns: Wise buyers create a reserve, in case, there is some down – turn, in their career, etc, which reduces their income, and cash flow. I recommend an amount equal to approximately, six to nine months, mortgage (including principal, interest, real estate taxes, and escrow items), plus fixed monthly costs (usually, utilities).
3. Reserve for immediate preparation: There is generally, a degree of work, a new homeowner, wants, and/ or needs to do, to make the house, his personal home! These items often include painting, floors (carpets and/ or wood floors), etc. It’s wise to over – estimate, and be prepared!
4. Reserve for repairs: Be prepared for the repairs, homeowners, will need to do. Some of these, include: appliances, electrical, plumbing, etc.
5. Future maintenance: These items are things, such as roofing, patios, exterior, and regular items.
6. Reserve for renovations: What might you like to change, in the future? Be prepared for these renovations, such as kitchen, bathrooms, etc.
A wise, prepared homeowner, is generally, the one, who will get the most happiness, from his house. Will you have the discipline to proceed, in a wise, and prepared manner?