| Financial Education
Are You Ready to Buy a Home?
Use these questions to help you decide if you are ready to buy a
home:
1. Do you have a steady source of income? This usually means you have a
job or other source of income.
2. Have you been employed on a regular basis for 2-3 years?
3. Is your income reliable?
4. Do you have a credit history? This refers to whether you have ever borrowed
money for any purpose.
5. Do you have a good record of paying bills?
6. Are you able to pay your bills and other debts?
7. Do you have the ability to make a mortgage payment every month plus
handle additional costs for taxes, insurance, maintenance, and repairs?
8. Do you have money saved for a down payment? The down payment is
the portion of the home's purchase price the buyer pays in cash. The
more you have for a down payment, the less you will need to borrow.
Lenders prefer that you have 20% of the purchase price of your home
for a down payment. For example, 20% of a $50,000 mortgage is $10,000.
However, there are many special programs that require a smaller or no
down payment.
If you make a down payment of less than 20%, you will generally have
to purchase Private Mortgage Insurance, or PMI, or participate in a government
mortgage program.
Mortgage insurance protects the lender if you default on the loan. It is
an additional cost of the mortgage.
If you answered yes to the above questions, you might be ready to buy a
home. If you answered no to any of them, concentrate on strengthening those
areas.
There are many other questions to answer when you decide to explore
home ownership. For example:
1. Where do you want to live?
2. What kind of school and neighborhood do you want for your children?
3. How much space do you need?
While we will not cover these questions
in this course, it is important for you to consider these questions when
deciding to buy a home.
|
Your
Own Home
