Making Sure You Are Ready To Buy a Home

You know you're ready to buy a home if:

1. You have developed a good household budget and can stick to it. Owning an Ulster County home for sale is much different than renting and you will be experiencing a whole new set of expenses. If you don't have a budget, start one. Without a budget you really have no idea where your money goes each month. You may be very surprised to see exactly what you spend and what you spend it on. Knowing your expenses intimately will tell you exactly how much you can afford on a new home.

Once you get your financial house in order, draw up another budget using all the expenses you may encounter as a homeowner. Ask your local Ulster County REALTOR to assist you in researching home prices in your area. If you are in the Hudson Valley or Ulster County, I would be happy to assist you with this process. Use this information to figure out roughly what your monthly mortgage payment is going to be. Then factor in utility bills, home owner insurance, property tax, school taxes, maintenance costs and whatever else may be associated with owning a home. If after you go through the process of you come to find out that you simply can't afford it, now is not a good time to buy, regardless of the state of the current market.

You know you're ready to buy a home if:

2. You have a good down payment. It used to be that you needed a down payment in the amount of 20% of the total cost of the home. At the present, in Ulster County, the median is right around $240,000. For a home in this price range, a 20% down payment would be around $48,000. Click Here for our Mortgage Calculator.  Today there are a lot of home loan products that can aid you with get around the 20% down payment, just be sure what these programs will cost you in the long run. It is easy to become obsessed with getting into the home and forget about what it will cost you in the long run. While it is very possible to "get into a home" without coming up with a large down payment, you run the risk of having no equity in the event you may be forced to sell causing a loss at the closing table. Equity can also be a good source of emergency cash if needed down the road.

In addition to a down payment, don't forget about closing costs. Closing costs usually range in the area of 3 to 7 depending on the loan product and other factors with regards to the property itself.

You know you're ready to buy a home if:

3. You have a steady source of income. Buying a home is a long term financial commitment with very large consequences, so you will need consistent flow of cash coming in each month to cover the expenses we talked about earlier. If you are a student or plan on going back to school you may need to reevaluate you're your cash flow plan.

You know you're ready to buy a home if:

4. You have an emergency savings account. As a rule of thumb, you should have enough money squirreled away to cover 6 months of living expenses. You must be prepared in the event something happens to interrupt you incoming cash flow. It is smart to be prepared for such catastrophes as illness, layoffs or even natural disaster.

You know you're ready to buy a home if:

5. Your current debts are under control. A responsible lender will make sure you have enough monthly cash flow to not only cover the new mortgage payment but your existing obligations to other creditors. The lenders use a process called debt-to-income-ratio to figure out where you stand in terms of your financial obligations to them, other creditors and your monthly income. If at all possible, you should try to pay down some of your larger debts before making the mortgage application. It is also a good idea to not open up any new credit accounts or loans six months prior to applying for a home loan.

You know you're ready to buy a home if:

6. Your report is in good condition. Even though you don't need perfect credit to get a home loan, a good credit score can help you get a better interest rate which will save you money down the line as well make for a better monthly payment. The government allows you one free credit report a year from each of the three credit bureaus. It is always a good idea to know what is on your credit report and what lenders will be seeing when you apply.

You know you're ready to buy a home if:

7. If you are ready to settle down. Typically, you must stay in a home for at least three years while the appreciation in value offset your buying and selling costs. While investors know ways around this, first time home owners should not take this type of risk. Staying in your home longer is more important now than ever due to the fact the home value appreciation is beginning to slow. If you can't stay in one place for at least three years, think about renting.

You know you're ready to buy a home if:

8. You are ready for a more responsible lifestyle. Just because you can afford to buy the home doesn't always mean you should. Home ownership is a whole different life than what you might be used to. Remember all the headaches you used to stick your landlord with? Get ready for those types of headaches. If something breaks, you have to fix it.

With all this being said, there is a lot of joy and accomplishment that comes with owning your own home. My intent really is to make sure you are ready. Beyond the emotional rewards, there are a good amount of financial benefits to owning a home as well including tax deductions, appreciation, equity and more. With these eight things strongly considered, I would be happy to help you find your new Ulster County home.

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