You might’ve spotted a “For Sale” sign on the home you’ve always dreamed of owning. You may be admiring the recently purchased home of a friend who went with a mortgage. Maybe you want more land or just are craving more privacy. No matter the reason, sooner or later everyone will wonder if it’s time to buy a home.

If you think it’s time for you to take the plunge, here are some thoughts to consider:

  1. It’s a big investment. It takes a lot of money to buy a home, from the closing cost (around 3% of the home’s purchase price) to the down payment. Consider whether or not you have the cash to handle these expenses along with a monthly payment.
  2. Debt is expensive. Lenders will look at your debt-to-income ratio when deciding whether or not to offer you a loan. Traditionally, most lenders will follow the 28/36 rule. This means, your house (and related payments such as insurance) shouldn’t exceed 28% of your pretax income and when combined with your other bills shouldn’t exceed 36% of pretax income
  3. Buying costs more than you think. It’s a mistake to look at your rent payment and your mortgage payment and assume that because you can afford one means you can afford the other. These are not comparable as there are other fees that come with a mortgage payment to consider. There are insurance fees, property taxes, HOA fees; as well as maintenance costs, utilities and other fees that aren’t present when renting.
  4. Buying makes you less mobile. When owning a home, it’s much more difficult to simply pack up and move should you get a new job or just want a new location. It’s easier and less expensive to leave a yearlong lease than to sell a home, especially if you’re still making payments on the house.

So before you make the decision to buy, take the following steps:

  1. Evaluate your current debts to see how much pretax income you have left, remembering the 28/36 rule mentioned above.
  2. See how much cash you have available. You need enough to cover the down payment (traditionally 20% of the home’s purchase price, however, special programs with down payments as low as 3% are available in some cases) closing costs, plus it’s helpful to have some extra in the event of an emergency.
  3. Get preapproved for a loan. Contact a mortgage lender to get preapproved for a loan. Preapproval doesn’t require acceptance of the loan, it just shows agents and sellers that you’re serious about purchasing. Any serious agent will ask if you’ve been preapproved anyhow so it’s nice to get this taken care of early.

If you’re looking to buy a home and are looking for mortgages in Joplin, MO, contact our office today to find an option that’s right for you.