Buying a house is one of the biggest investments most people make, which is why many buyers spend months, if not years, getting ready to take on the tremendous responsibility that comes with being a homeowner.
Here are three questions to ask yourself if you’re wondering whether 2017 is the year you’re ready to make such a commitment.
Question No. 1: How is my credit?
For the vast majority of first-time homeowners, buying a house means applying for a mortgage. You’ll want your credit to be as strong as possible before starting the process. If it isn’t, you might want to consider taking time to bolster your standing, even if it’s just adding several months of timely payments to your record. Stronger credit can reduce borrowing costs, while weaker credit can limit your ability to borrow. Everyone is entitled to a free annual copy of his or her credit report. It’s available at www.annualcreditreport.com.
Question No. 2: Do I have enough for a down payment?
Many mortgages, especially for first-time homebuyers, are insured by the Federal Housing Administration. These loans have lower qualification standards compared with conventional mortgages and minimum down payments beginning at 3.5 percent. That said, there are advantages in going with a larger-than-minimum down payment. Increasing what you put down can often result in a lower interest rate, and putting down 20 percent or more can help borrowers avoid costly mortgage insurance.
Question No. 3: Do I know what I want and what I can afford?
All homebuyers should identify their needs versus wants before looking for a home. Narrowing the possibilities will hone your search to properties that merit a worthwhile investment. It’s important to craft a realistic budget that takes into account your lifestyle. Someone who values vacationing twice a year, for example, may have less buying power than someone of a similar income and debt burden who is content taking an occasional daytrip.
For more information on how AAA can help you find a mortgage, visit AAA.com.