BUYERS' CORNER
 Where
To Begin
While the American Dream is one of home ownership, there may be times
when owning a home makes neither practical nor economic sense, and
for a few, a home should never be the ultimate dream. For the majority
of us though, home ownership provides both financial and emotional
advantages, and for most people, the purchase of a home is the largest
and most profitable investment they'll ever make. If you think you're
ready, consider the following:
Is your job stable? With mergers, overhead reductions, downsizing,
and re-structuring, hardly anyone's is. If you lose your job, can
you easily replace it without leaving the area? Relocating can cost
thousands in commissions and other expenses associated with the forced
sale of a home. While I'm not advocating paranoia about losing your
job, I do want you to know the importance of employment stability,
a key factor in making a wise home buying decision. If you're married
or have a significant other whose salary will be needed to help make
the mortgage payment, then the security of that person's job must
be considered, too.
Furthermore, if you plan to purchase a home within the next twelve
months, it's not time to change jobs. Lenders have reservations about
granting mortgages to those whose employment seems tenuous, and if
you think you may have other reasons to cause lender reluctance, such
as less than perfect credit, it's especially important to demonstrate
a stable work record. Save the job hunting until after closing.
Financial Status
Do you have a pattern of regular savings? Is your credit in good
shape? (Don't know? Click on, Checking Credit,
for an answer.) Are you stretched to make the payments on that jazzy
new convertible, the sleek personal watercraft you looked so good
on last summer, or the ten-thousand watt mega-blaster stereo that
rattles windows three blocks away?
In order to qualify for a mortgage, you'll need to demonstrate a good
record of making payments on credit cards and consumer loans. And
if you are planning to purchase a home within the next year, you need
to cut back on your credit purchases now. Adding to your debt will
limit your borrowing power and create a strain on your budget once
you do have a mortgage. However, even if you are struggling to make
your monthly payments and have sustained a few blemishes to your credit
rating, there are ways to reduce debt, get back on track, and begin
planning for the purchase of a home.
A factor that may not impress your friends but always brings joy to
mortgage lenders is an applicant who can demonstrate a program of
regular savings. If you have good savings habits, lenders know you
are an above average credit risk. And, of course, if you plan to buy
a home, you'll need some of those savings for the down-payment and
closing costs. Later, you'll need the discipline that a savings program
develops in order to keep your mortgage payments up to date. If you
haven't been saving, start today! Any program is better than none.
Then, after a few years in your new home, you will benefit from the
increased appreciation, adding to your savings. With a national savings
rate below 5%, many Americans find home ownership the easiest way
to accumulate wealth.
|