When you’re buying a home, you should be thinking about not just the purchase price of the house, but you should be really thinking about your household budget. Saving money and being able to have a life without letting debt get the better of you should be a goal as it relates to deciding whether you should buy a home or wait. If you’re buying a home, you ought to have these things under your belt…

You need to have income. This is a no-brainer, but you be surprised. You must show income on paper and prove you can afford the mortgage you’re applying for. You must have a down payment and a sufficient credit score. Generally, you need a credit score to be at least 650 and have at least 3.5% down. This doesn’t mean if you don’t have these things, you can’t buy a home it just means that’s on average where you want to be or better. So what risks are there in buying a home?

The number one risk people have in buying a home it’s two-fold presently. “I’m buying a house at the top of the market, and I’m buying a house with an interest rate I really don’t like.”

The reality of it is that no mortgage lender, real estate agent, or real estate guru, not even you as a home buyer can control what housing prices do. You don’t have the ability to control what interest rates do. What you do have the ability to control is your income, your credit score, and your down payment. The three most important ingredients for buying a home in the first place are. So, if we know that historically over the course of time housing prices always rise, the interest rates are cyclical in nature, and you have a long-term hold strategy in place. If you’re not changing jobs or moving or you’re not in some sort of financial transition is there really risk in buying a home? Not so much, but the perceived risk for most families can sometimes take over because perception is reality.

When you buy a home, you commit to a mortgage payment comprised of principal interest, taxes, and insurance which means you need income to offset that monthly obligation. You also need to have enough income to support the rest of your other monthly bills and expenses as well. This includes food, utilities, childcare, and all the other financial costs in your life. The most thing is the total monthly payment as it relates to your income. Remember if you buy a house and the interest rate is less than favorable doesn’t mean that you’re locked in for that mortgage payment for 30 years. Granted even though it’s a 30-year fixed because you could either sell the property in the future, rent out the property, or refinance the property (down the line) subsequently driving affordability and lowering the perceived risk of buying a home. So, the reality of it is the perceived risks of buying a home are much greater than the actual risks. Assuming the income, the cash, and the credit are sufficient to afford a low-rate monthly mortgage payment.

If you’re looking to get pre-qualified to buy a house start today by getting a  no-cost loan quote!