8 questions to ask before you decide to buy a home
Almost all Americans want to buy homes of their own. Still, buying a home is a big financial commitment and shouldn’t be entered into based purely on your emotions. There are many factors to consider before committing to a piece of real estate. Here are a few questions to ask yourself before you finally purchase your own home.
1. Why do I want to purchase a home?
This is an important question to keep in mind during your research. Most Americans will say they want to buy their own house because owning a home is part of the American dream. But don’t let your emotions lead you into a bad financial situation. Consider the tangible, practical reasons why you’re buying a home. Maybe you want space to raise a family or are tired of dealing with rental leases. Whatever your reason, don’t let your feelings cloud your judgment.
2. What might my life look like in five or ten years?
When buying a house, you need to be certain you’ll be living in it for an extended period of time. Buying and selling a house is a disproportionate amount of financial hassle and risk to deal with if you end up having to move within a year or two. At that point, you might as well rent. You will need to live in the house for five to ten years to really get a return on your investment. Additionally, in a good housing market, the longer you wait to sell, the more money you’ll get back in profit.
3. How is the Cincinnati real estate market doing?
After the financial crisis of 2008, every housing market took a significant downturn. But now, almost 10 years afterward, housing markets have bounced back. And Cincinnati’s real estate market is making a slow climb upward. In 2016, Ohio had its biggest year in real estate sales since 2005. While the average price for a home in Ohio is much less than the national average, that doesn’t mean the housing market in the state is terrible. It means you might be able to afford a better house for less.
4. Would a mortgage be cheaper than renting in the Cincinnati market?
Depending on your financial situation, buying a home might be less expensive in the long run than renting an apartment or a house. Rental rates in Cincinnati are increasing, and the city is projected to be one of the hottest rental markets in the country in 2017. The median rent in October 2016 was $1,239, with a projected increase of 5.2 percent in 2017. That can get pretty expensive. It might make more financial sense for you to make a monthly mortgage payment on a house that you can eventually sell for a profit a few years down the road.
5. What can I afford?
You should take a hard look at your finances. See how large a down payment you can offer and how much your monthly mortgage payment might be. There are helpful mortgage calculators online that can help estimate measures like your mortgage affordability or monthly payment. Until you have concrete information about your loan, you can estimate your interest rate based on a 20- or 30-year mortgage plan. Compare these rates to comparable rental rates in the area you’re looking to get a more complete picture.
6. What loans can I qualify for?
Qualifying for a loan depends on several other factors as well. Some banks are willing to give lower interest rates than others. Your credit history will likely play a role in setting those rates, too. If you have a poor credit score, you might want to spend time building that up before committing to a mortgage.
One great resource you can turn to is Cinfed Credit Union. Cinfed strives to prove a simplistic approach to mortgage loans. Cinfed understands that a mortgage is like a finger print, unique and a cookie cutter mortgage does not always work. Credit unions take pride in understanding your needs to find a mortgage that works for best you.
7. Have I factored in all the hidden costs?
The cost of buying a home isn’t just the mortgage. You have to factor in the time it will take to peruse your housing options. First, if you’re using a real estate agent, he or she will probably have a commission fee. This is usually some percentage of the cost of the house and typically paid by the sellers. Ask about this upfront so that you’re not surprised. Next is a house inspector. Before purchasing, you’ll want to hire a trustworthy inspector to examine the house and make sure it is in good condition. You might even want to call in a different inspector to check out the plumbing in the house too.
You’ll also need to factor in property taxes, homeowner’s insurance, homeowner’s association fees, and much more. Don’t overlook these costs, or you’ll end up with a big surprise when you finally purchase your home.
8. What will happen at closing?
Another hidden cost of buying a home is the closing fees. These can range from application fees to attorney fees to origination fees and so on. This can run you quite a bit of money, putting you in a tough spot if you’re not expecting it. If you’re looking for a good deal, Cinfed’s closing costs are as low at $499 —which is an excellent price for any bargain-hunting future homeowner. If you’re interested, you can get pre-qualified for a home loan through Cinfed online. Cinfed has many flexible options to fit any lifestyle and budget.