Time to Buy a House? Here Are Three Things to Consider
We’re living in strange times, but life keeps on moving forward. If you were planning on buying your first house before this crisis hit, then you probably put that on hold for the time being. But we’re here to let you know that now may actually be a great time for you to go forward with your home buying journey. Although COVID-19 has caused plenty of upheaval throughout the world, there are many individuals and families who are still able to work and make ends meet. If you fall into this category and you were originally planning on buying your first home, then it might seem as if everything has lined up somewhat perfectly. You see, mortgage rates are actually very low as a result of COVID-19. This can be incredibly beneficial for you, but it’s still crucial to balance the pros and cons of the situation. Keep reading to see exactly what you can expect from buying a house during this time.
1) Are You Ready to Become a Homeowner?
Buying a home is a sign of evolution. It shows that you have enough to make a down payment and pay monthly mortgage payments (in addition to all the other costs that come with buying a home). A home also signifies much more. It’s a stable location where you can begin or grow your family. Unlike living in an apartment or home for rent, where tenants are beholden to a landlord or property management company, homeowners become wholly responsible for the upkeep and maintenance of their homes. This newfound freedom also means it’ll be more work, but that’s the beauty of homeownership.
Now, this is a question that comes up rather early in the process but are you ready, really ready to buy a home? Emotionally and monetarily, of course. You shouldn’t buy a house if you’re not planning on living in the same city for more than five years. Sure, there’s nothing stopping you from buying a house then moving out two years in (we understand, life can get in the way and perhaps you or your significant other gets a great new job opportunity and you have to move immediately) but let’s say you’ve lived in your city for a few years now and you’re starting to get a bit tired of it. Buying a house will tether you to this city for at least the next five years. If this sounds like a great future for you and your family, then we can move on to the next step. If this doesn’t sound that great, then it may be in your best interest to hold off on buying a home.
Let’s shift perspectives; perhaps you’re completely ready to buy a home but you’re not there financially. There’s no need to rush it. All good things happen in their own time, so if you’re not able to buy a home now, especially now, then it’s okay to hold off for now. If your current living situation is still comfortable and you’re still able to make your monthly payments, then it might be best to wait until the world goes back to normal. If possible, you can take this time to start saving up for your down payment.
2) How Much Can You Afford?
If you’ve decided to keep moving forward with your home buying journey, then it’s time to figure out the more intimate details. First and foremost, you have to figure out exactly how much home you can afford. Down payments are generally 10% of the total property price. So if the home you want to move into costs $150,000, then you’re down payment might be around $15,000. But just saving enough for the down payment won’t be enough. Although you won’t have for the entire home at once, you’ll still have to pay for a lot of costs upfront. Things like closing costs and utility expenses can add up and drain your funds before you even know it. So make sure to have enough saved up before you even begin the home buying process. Try saving a bit of your income so by the time a year passes, you’ll have more than enough to cover the costs.
Now comes the big question, can you get preapproved for a mortgage? Due to the COVID-19 outbreak, mortgage rates are actually substantially lower now so this might be a great time to get preapproved. If this is your first time buying a home, then you’re even more in luck since the city of El Paso offers a First Time Homebuyer Program that “provides 0% – 3% deferred loans to first-time homebuyers purchasing a property in the City of El Paso.” If this is something that interests you, then you can learn more about it here.
Getting preapproved for a mortgage can seem daunting but you shouldn’t get discouraged. In fact, it’s a good idea to contact more than one lender to see who’s the best choice. You’ll also need to have a good credit score (at least 620), positive credit history, a good debt-to-income ratio (according to Nerdwallet, most lenders prefer a DTI of 36% or below), and your financial records. Once you have all the information, you can proceed with the preapproval process. Then you’ll be able to take the next step!
3) How Much “Home” Do You Need?
When it comes to finding the right home, it’s necessary to keep a few crucial things in mind. You don’t want to buy a home that’s “too much” home, especially as your first home. But then you shouldn’t run to the complete opposite side of the spectrum and buy a home that’s way below your means. Finding that perfect goldilocks home may seem difficult and daunting but it’s possible, you just have to set up a budget in mind and work to not go over it. How many rooms do you need now and how many might you need in the future? Are you planning on having kids or perhaps you’d like a guest bedroom or a room for your in-laws. Would you be okay doing some handiwork to upgrade your home’s appliances or would you rather move into a home that’s already fully set up? This is where the freedom of homeownership comes into play, as you basically have free reign to do with your home as you wish. If you see a home with ugly wallpaper and dirty flooring but it’s 50,000 less than your budget and in a neighborhood you like, then it might be a great option, as long as you don’t mind getting your hands dirty. You need to be careful, though, as some homes may seem like the perfect fit but they might have roofing problems or faulty HVAC systems that will cost a lot to fix. This is where a home inspection comes in handy. You don’t want your first home to become a money pit.
This is also a great time to consider buying a brand new home. New homes don’t require as much maintenance and come with warranties while older homes don’t. You can choose Zia Homes to help you find the right home. As one of El Paso’s foremost home builders, we understand the needs of our neighbors. This is why we build homes with you in mind. Our homes are energy-efficient, beautifully designed, and affordable. Our floorplans are excellent for first-time homebuyers as they perfectly encapsulate the desires and needs of El Pasoans all under one beautiful roof. Give us a call today to learn more about how we can help you become a homeowner!