Some Questions You Should Ask Before You Buying A House
There are many people who wonder if they can afford to buy a house. The renting market is pretty inflated right now in many areas of the United States, which means that you can buy a house for about the same monthly payment that you are paying right now to rent. There are some questions you should ask yourself before you try to buy a house.
How Long Do You Plan On Staying In The Area?
If you are really temporary, you probably shouldn't buy a house. The reason for this is that if you try to turn around and sell a house a year after you buy it you are likely to lose money simply because you can't get make back the closing costs and all the origination fees for the loan. You need at least a couple years to even out all of those costs. However, if you are only planning on staying somewhere 3-5 years, you can still buy a house, but you might want to consider getting an adjustable rate loan. This is a loan that will give you a lower interest rate upfront, and then it will get more over time. A conventional loan, conversely, has a fixed rate throughout the entire life of the loan. This is ideal if you are planning on staying somewhere throughout the duration of the loan. An adjustable rate can help you save money if you are sure you are going to move, if not, you may need to refinance the loan down the road to save you money.
Is Your Job Stable?
Another important job is to make sure that you are in a steady enough employment that you can practically guarantee making the payments for some time. If your job is totally commission based, this can be a little scary since you might have periods where you don't get paid. In this case, you might want to have a large savings account before you buy a house, or consider getting a side job that has a stable income so that you can make sure you can afford the payments each month.
This also applies to your actual job. You need to ask yourself if your job is stable enough that there isn't a chance you will be laid off anytime soon. Getting into a mortgage is a big commitment, which is why it is best to wait until you have steady employment before you make the commitment.
By asking yourself these questions you can determine if you are ready for a mortgage.