subject: Realizing Your Dream Of Owning A Home [print this page] Realizing Your Dream Of Owning A Home Realizing Your Dream Of Owning A Home
Many Americans at some point in their lives will find themselves as renters. Whether you are just beginning to live on your own, have become recently divorced, or have fallen on hard times; everyone at some point will find themselves as renters. The question then becomes how to determine if you can afford to buy a home.
For starters, you will need to take a long hard look in the mirror and evaluate your finances realistically.
It is extremely important that you be debt free (except for the home mortgage) and set up an emergency fund. Many financial experts agree that an emergency fund should be equal to three months of monthly salary. Some feel $3000-$5000 is adequate.
Although it sounds like common sense, living within your means is a difficult to do, particularly if you are a single parent. If your personal finances are in disarray, this may require a lifestyle change.
Despite the news coverage and tv commercials, many people still do not monitor their credit reports. The three major credit bureaus, Transunion, Experian, and Equifax, allow you to get one free credit report per year. If you pull the reports at different times for instance, Equifax in January, Experian in May, and the Transunion in September you can then check your credit once every four months.
Financial experts like Dave Ramsey recommend that first time home buyers should put down a minimum of 20% of the homes purchase price in order to avoid paying private mortgage insurance (PMI). It is also recommended that you limit the mortgage term to 15 years rather than the norm of 30 years.
Online tools such as a Mortgage Qualification Calculator and a Renter Mortgage Affordability Calculator can help you determine how much of a mortgage you can afford safely based on your income and other factors.
Closing Comments
Becoming a home owner is the American Dream. By following these tips you can keep your dream from becoming a nightmare.
