To Buy Or Not To Buy

In recognition of American Housing Month, West Plains Bank and Trust Company is highlighting five questions first-time buyers should consider before purchasing a home.
“Owning a home is a great investment,” said David M. Gohn, West Plains Bank and Trust
Company President and Chief Executive Officer. “However, before jumping into the market, it is
extremely important for consumers to consider the costs involved and budget accordingly to ensure they’re able to meet all of their financial obligations.” 
West Plains Bank and Trust Company encourages consumers to consider at least five questions before beginning their housing quest.
1. How much money do you have saved up?​
Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are typically 5 to 20 percent of the price of the home. Security deposits on rentals are usually about one month of rent and more if you have a pet. But be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs.
2. How much debt do you have?
Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income. Recent regulatory changes limit debt to income (DTI) ratio on most loans to 43 percent.
3. What is your credit score?
A high credit score indicates strong creditworthiness. Both renters and homebuyers can expect to have their credit history examined. A low credit score can keep you from qualifying for the rental you want or a low interest rate on your mortgage loan. If your credit score is low, you may want to delay moving into a new home and take steps to raise your score. For tips on improving your credit score, visit aba.com/consumers. 
4. Have you factored in all the costs? 
Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Find out if you will have to pay for parking or trash pickup. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. If you are planning to buy a home, factor in real estate taxes, mortgage insurance and possibly a home owner association fee. Renters should consider the cost of rental insurance.
5. How long will you stay? 
Generally, the longer you plan to live somewhere, the more it makes sense to buy. Over time, you can build equity in your home. On the other hand, renters have greater flexibility to move and fewer maintenance costs. Carefully consider your current life and work situation and think  about how long you want to stay in your new home.
West Plains Bank and Trust Company opened its doors to customers in 1883, making it the oldest continually operating business in the area. With 138 years of service to the local region, total assets of West Plains Bank and Trust Company have grown to more than $603 million with seven locations and a loan production office. For additional information, visit www.westplainsbank.com or call 417.256.2147.
Pictured are first-time home buyers Brandon and Tayler Mitchell.
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Howell County News

110 W. Main St.,
Willow Springs, MO 65793
417-252-2123

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