Questions to Ask Before Buying Your First Home

There are so many factors to consider when buying your first home.  The experience of becoming a home owner can be both scary and exciting! How do you know if you should buy or if it is the right time for you? Let the following questions help guide you through some of the important issues to consider. 

Have you saved for a down payment?

The typical down payment for a home is 20%.  There are programs that help you buy a home with a smaller down payment, but you'll want to check with your lender if PMI is required. PMI stands for Private Mortgage Insurance which protects the lender in case you don't pay. PMI will add to your monthly mortgage total.  Most loans require this if you don't have a full 20% down.

Will you be happy in the same house for many years?

Unless you are in a hot real estate market, it will take time for your home to increase in value. Now is the time to plan ahead.  Consider whether you will be having children, will children be moving away soon, or do you have aging parents who may eventually need to live with you. The home you make a commitment to needs to be appropriate for your life now as well as for many years from now.  

Are you handy?

If you (or your spouse) are handy, then you can be ready and able to tackle projects and repairs as they come up.  An older home may be a fine fit for you as long as you keep in mind the cost and time of repairs.  A newer home may need less repair and may be a wiser choice for those who are not as handy.  

What will it cost to live here? 

Even if you have no problem affording the mortgage payment, don't forget about other ongoing expenses.  Property taxes and insurance rates are usually added into your monthly mortgage payment.  These can add up to a lot in your monthly expenses.  You'll also want to consider utility costs.  Your realtor can ask the previous homeowner for this information so you can factor those into you monthly costs as well.  Many homes also have homeowner association dues that need to be considered too.

Do you have what you need to furnish and care for a home?

Once you own a home you will be responsible for upkeep. You'll need to allow for purchases such as lawnmowers, tools, ladders, gardening items and other maintenance items.  Furnishings need to also be considered.  Curtains, blinds, basic furniture, and wall decor are just a few expenses that may need to be addressed.

Do you have an emergency fund?

When you own a home, you are fully responsible for repairs. You will need an emergency fund set aside for the unexpected, which will eventually happen. A basic repair may only cost $100, but what if you need a new water heater or furnace? Have money set aside to deal with emergencies.  

Are you ready to buy your first house?

Home ownership is a serious investment that can come with unexpected expenses if you are unprepared.  Consider the neighborhood, your life goals, and whether you can afford all of the aspects of home ownership before you buy your first home so that it may be a pleasurable experience!