Buying Your First Castle In The Air : Online Shopping Guide
Buying Your First Castle In The Air
Buying a house is a wonderful thing - or it should be. Exercising a little common sense and controlling the demon of IwantitIwantitnow can make a big difference, not only to your home ownership experience, but also to your credit, stress level and budget.
Your first step is to make nice with the credit bureau. You should be getting reports from all of the major credit bureaus - Equifax, TransUnion, etc. to make sure that your credit report is A) good. B) not marred by a mistake, old indiscretion or identity theft and C) improvable if it isn’t already sparkling. If there’s anything that is currently bogging your credit down, you won’t get as good a rate as you could if your credit looks shiny and clean. There’s a lot you can do to improve it, including getting help (although you may want to think twice about going to a credit counselor, because that goes on your report and doesn’t look that great - unless your credit is horrible to begin with). A surprisingly short period of work can result in a significant jump in your credit rating.
Save for a down payment and the costs of purchasing a home. While 0% mortgages are available, it’s hard to find such an animal that won’t put you in the poorhouse with the jumped-up interest. Even $5000 can make a big difference for you. The ideal is 20% of the home’s value, but, let’s face it, not too many people have the wherewithal to do that in the timeframe that they have. The attendant costs of buying a house - home inspections, various fees, etc. - alone can take a big chunk out of your savings. The larger the down payment, the smaller the loan, which means less interest.
The long run counts when it comes to houses. Try not to think of it as a status symbol - “Look! I’ve finally grown up! I own PROPERTY! (yay!)”, you’re obtaining both a place to live and a close to life-long responsibility (if you choose to keep owning your living space). If you play your cards right, you also get equity, which is like having a part of your rent deposited in your savings account. Since everybody has to live somewhere, it makes sense that you live somewhere that gives you a return on the money you spend every month. However, it also means that missing a payment means more than just eviction.
It makes sense to purchase a house. The problem that people have is looking to where they want to be instead of looking where they are. Buying a house based on where you think or hope you might be in five or ten years is not in your best interests. You could suffer setbacks, you could lose your job, real estate value could plunge into the toilet… it’s not a great idea to put the maximum amount of your paycheck into a house, depending on raises or job improvement to eventually make it affordable. It’s a lot easier to put a house up for sale, search for, find, pack and move into a newer, larger house than it is to pull your credit out of the latrine because you bought a house that you couldn’t afford today at standard interest rates.
It’s hard to resist buying what you really want, when it’s handed to you on a silver platter and that’s exactly what a lot of loan companies do, especially for buyers who have less-than-stellar credit. However, think about it - you might enjoy your McMansion for a little while, but what are you going to do when your rates change or become unmanageable? Lenders are an unforgiving lot - one payment missed can mean that they can foreclose on your home, ruin your credit and your life. Some unscrupulous companies have done this to hundreds of people who were unable to keep their dream homes from the tight fist of real life.
Let’s suppose you buy a house that is well within your means. You also start saving towards - ideally you already have - a nest egg that will carry you through at least a month or two of no income. You’re set if something happens because you’ve already looked ahead to the time when you get laid off or finally tell your boss where to put the finger he’s been shaking in front of your nose for the last two-and-a-half years. The odds of you getting another job in the same pay range are usually pretty good if you’ve kept your nose clean and haven’t robbed any banks in the recent past.
One of the great things about buying well within your means is that you will have a lot more money to spend every month that isn’t getting sucked into your mortgage. Homes, even condos and town homes, require regular amounts of maintenance. Appliances bust, tiles sometimes break and carpets can need replacing. Imagine actually having enough money to pay for these! Also, replenishing your savings after a home purchase is a smart idea, for the rainy days that are closer to hurricanes.
Forget the “quick path to owning your own home”. Working to attain decent credit, saving up money for a down payment and the associated costs of home purchasing and buying a home well within your means is really the fastest way to successful home ownership and will repay the sacrifices you make with an affordable home that will eventually bring the castle you dream of, down to earth.
Marci McFarland is a Sarasota real estate agent with a broad professional approach. Her unique insight into the various lifestyle requirements of her clients, combined with an intimate knowledge of her service area including Downtown Sarasota real estate, make her an ideal choice for families and investors alike.
Buying Your First Castle In The Air / Author: Marci McFarland
