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rocketmortgage.com - The Emotion Behind Buying A House | Rocket Mortgage

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Are you ready to buy a home? Many new home buyers underestimate the true upfront and financial cost of owning a home versus renting. Let’s take a look at a few considerations to keep in mind before you buy.

Personal Considerations

It’s normal to feel incredibly excited when you decide to buy a home. After all, buying a home gives you access to more space and allows you to build equity. But buying a home isn’t always the right decision. Be sure you ask yourself these questions before you buy: Am I ready to commit to this area? A mortgage can easily be a 30-year commitment. While you won’t need to live in your home for the length of your mortgage term, you’ll still need to make a long-term commitment to the area where you buy. If there’s a chance you might need to move for work or family in the next few years, buying might not be right for you. Am I ready for a new lifestyle? When your $5,000 HVAC system breaks down in your apartment, you can call up your landlord for a repair. When you own your home, that financial burden and repair falls on you. You need to be prepared to handle your own upkeep and maintenance or equipped to handle your own repairs. Am I ready to spend even more of my paycheck? From maintenance to homeowners insurance to HOA fees, owning a home is expensive. You may be barely making your paychecks last while renting, which might mean you’re not ready to own a home.

Financial Considerations

You’ll also need to consider a number of financial factors before you apply for a mortgage loan. Here are a few questions you should ask yourself before you apply for a preapproval: Is my credit score high enough? Your credit score is a three-digit representation of your reliability as a borrower. As a general rule, you’ll need a credit score of at least 580 to qualify for a mortgage loan, though many lenders require a 620 or higher. Do I have a large enough down payment? loan or VA loan . But if you don’t qualify for either loan, you’ll need at least 3% of your home’s purchase price in a down payment to buy a home. Contrary to popular belief, you don’t need to have a 20% down payment to buy a home. You may be able to buy a home with $0 down if you qualify for a USD A or. But if you don’t qualify for either loan, you’ll need at least 3% of your home’s purchase price in a down payment to buy a home. Do I have too much debt to buy a home? Lenders look at your debt before they issue you a loan. The more debt you have, the more likely you are to fall behind on your loan. Calculate your debt-to-income ratio before you apply for a loan. Let’s say your DTI ratio is higher than 50%. You might need to pay down some debt before you buy a home. It can feel scary and intimidating to ask yourself these questions. But taking an uncomfortable look at your finances can be a necessary step to getting a mortgage. If you fall short of the qualifications you need to meet to get a loan, don’t panic or fall into despair. Create a plan to repair your credit, save more money or pay down your debt, and reapply at a later time.

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