Considerations for Buying a New House

If you rent a house or apartment, you may be wondering if now is the right time to buy a house. It is no secret that house prices are at their lowest, thanks to the housing crisis.

As tempting as it may be to jump into purchasing a new home, consider some of the following things when making your decision.

Savings

Do you have enough money in savings for a down payment on a home? If you don't have a down payment, you will most likely have to get an 80-20 loan (two loans at different mortgage rates) or get Private Mortgage Insurance, which can add to your monthly mortgage payment.

Budget

Usually the mortgage, upkeep, insurance, and taxes on a house are significantly more than rent. In my area in SC, you can rent a nice home for $650 a month, while the mortgage and other expenses of purchasing a similar home bring the monthly payment closer to $1100. Do you have enough extra money in your budget to cover the extra costs?

Prices Are Still Dropping

As good as a deal as some house prices are now, prices have not yet finished dropping. Many experts believe that the housing market won't begin to rebound until 2011 or later. If you can wait a little longer, you can shed thousands off the price of the home you purchase. It does require sacrifice, but it may be worth it.

Buy Only What You Need

When you start the process to find out how much of a loan you can be approved for, do yourself a favor and don't automatically look for a house that is at the upper end of the approval amount. When I bought my first house, I was approved for a $350 thousand dollar loan and in SC this will buy a lot of house.

When you're shopping for a house, it is easy to get caught up in the excitement and make a rash decision to buy one of the biggest, fanciest homes you tour. Try not to buy more than what you need to live comfortably.

Credit Score

Make sure your credit standing is as best as can be before trying to get a loan for a house. The better your credit is, the lower the interest rate will be, which will result in lower mortgage payments. For a fee, you can get your credit report and score online or you can view your credit report only at Annual Credit Report.