5 Questions To Ask Yourself Before
Buying A House
Buying a house is the
American dream, right? That is the idea that has always been talked
about. While, it can be a dream fulfilled and a good investment, it
can also be a long-term burden that turns into a financial disaster.
Because of that one needs to make sure they do not become house poor when
they buy. For some people, buying and owning a house just doesn’t make
financial sense. So before you commit to 30 years of house payments, ask
yourself these 5 questions before buying a house in Floresville.
1. Am I Buying a House in Floresville for the
Right Reasons?
The first step is to
determine exactly why you’re buying a house. Or why you are buying a house in
Floresville. Some people buy a house for the tax benefits and to plant roots.
Others, however, do so just because they think that’s what is expected of
them. For them renting might be a better option. A house isn’t always an
investment because it won’t appreciate in every case and there will be expenses
as well. So before you sign the contract, you need to make sure you’re buying a
house for the right reasons. Houses do not automatically appreciate in
value. If a house is not maintained it won’t appreciate and could lose
value. Value also depends upon other factors such as location
(neighborhood) and the town you choose to live in. In this area, values
have been appreciating for over 10 years but that is no guarantee that they
will continue to appreciate.
Is that area in an
upswing or could it be headed for a downturn? Because we are in the
Eagleford Shale area many of the towns across south Texas saw a large upswing
starting in 2012. When Eagleford started to decline while the areas saw a
downturn. But not all areas were affected by the downturn as much as
other areas? Why? Because some areas such as Floresville and La
Vernia compared to say Pleasanton are closer to San Antonio and that makes them
desirable to people who work in San Antonio, not just Eagleford Shale
employees.
2. Will Expenses Be More Than 30% of My Net
Income?
The mortgage payment
is far from the only expense involved in buying a house in any area. You also
have to factor in maintenance and repairs, insurance, property taxes, and so
on. And if these expenses come to more than 30% of your net income (take-home
pay), then you may not be able to afford the house. Estimates are that 39
million Americans can’t really afford their houses. And that’s usually because
they didn’t take into account those other expenses when figuring that
30%. And those expenses do occur, even in newer homes. The hot
water heater goes out, the roof is damaged by hail, the air
conditioning needs repair. Yes even when insurance covers things like
hail damage, there is a deductible of at least 1% of your home value for the
homeowner to pay.
Plus no one ever wants
to be house poor. “House poor” means not having any money to do anything
besides paying for your house. No money for eating out, going to the
movies, going to SeaWorld makes that house become a burden instead of a place
you love.
3. Do I Have Enough Emergency Cash?
Also when buying a
house, you need to keep plenty of extra cash on hand for all those inevitable
emergencies. Owning a house carries with it expenses for repairs that come up –
things like a leaking roof or a broken furnace. You simply can’t let these emergencies
catch you off guard financially. Financial experts recommend that you have
strong emergency fund before buying a house – ideally, one that will cover at
least six months’ living expenses. If you don’t, then maybe you shouldn’t buy
that house. The other factor that can affect you is losing a job or a
major illness where one has to be off work for an extended period of
time. That emergency cash fund will tide one through those type of
events.
4. 20% Down, Can I afford that?
If you want to avoid
the extra expense of private mortgage insurance (PMI), then the standard down
payment for buying a home is 20% of the house’s price – a pretty big chunk of
money. Paying 20% down let’s you avoid having to pay the extra expense of PMI,
which can be as high as 1% of the mortgage. Suppose, for example, you’re
borrowing money to buy a $300,000 a house. If you don’t pay 20% down –
that is, $60,000 – then you’ll have to pay an additional $3,000 a year
for PMI. So . . . can you really afford 20% down to save that money? If
not, there are other loans but most will require the PMI.
5. How Long Will I Live Here?
Don’t forget that the
actual process of buying a house has certain costs, not least of which are the
closing costs, typically 2% to 5% of the purchase price. So that same $300,000
house could cost up to $15,000 at closing. And if you don’t live in the house
very long and have to sell soon, you will actually lose money because there
hasn’t been enough time recoup the closing costs by appreciation. So, it’s recommended
that you live in a house a minimum of three to five years. That is the time frame that lenders
feel is needed to break even on the cost of buying a home.
Buying a house in is
the fulfillment of a long-held dream for some people, but for others, it’s just
not a good idea financially. So before you take that big step, ask yourself
these questions. Then if, after answering, you find that traditional house
buying isn’t for you, we can offer other options. Would love to help you in
your search!
Are you ready to buy a property in Floresville? We can
help!
Send us a message or give us a call today! (210) 216-7722
Floresville Real
Estate Agent – Faye Y Taylor Realtor® is here for help and to answer any questions you might
have
Serving all of Wilson County and the South
Texas area
Country Living with City Convenience
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