Spring is in the air and “For Sale” signs are multiplying faster than rabbits in an open field. It is the time of year when the housing market in Atlanta heats up. Are you thinking about buying your first home? Here are several things to think about before you start the process:
1.Do not find the home of your dreams without getting qualified for a loan first. Obtaining a home loan is not as easy as it used to be. You will need to find a good lender and submit an application in order to get pre-qualified for a loan. This will tell you how much you can afford so you look at homes in the right price range.
2. Do not borrow too much money even if you are qualified. Some lenders will allow you to borrow up to 45 percent of your total gross income for a home loan. Because they use the gross income and not the income you actually take home in your paycheck, borrowing up to the max may strap your cash flow every month. You do not want to be house poor.
3. Make sure you get information on the price of things like homeowner’s insurance, property taxes and any homeowner’s association fees. These things all add to your payment and need to be factored into the monthly expense.
4. Owning a home is expensive. It is ideal for you to have at least three months of payments available in savings so when a repair issue comes up, you have the funds to make the repair. There is no landlord who will step in and fix things once you buy, so be prepared.
5. Having a mortgage and property taxes may allow you to itemize on your tax returns. Now that you own, make sure to keep track of things like your charitable contributions, ad valorem on your car, and state taxes paid. If you have enough to itemize, you will want to make sure to take full advantage of the available deductions. If you do not have a tax accountant, now may be the time to hire one who is able to assist you with tax planning.
6. If your significant other is not able to be on the loan, think about the possible ramifications of putting their name on title before you add them. If they are on the title to the home, they own half of it just like you. However, they are not on the hook for the liability of the mortgage. If they leave or things end, you will owe the entire loan balance, but they own half the asset. It is wise to have a written agreement about what happens in the event of a breakup. Not that you will…but things happen.
7. Be flexible throughout the process. Home buying can be very stressful. There are many variables that come into play and you will need to be patient as you work through the home buying process. Learn as much as you can about how the process works and who is involved in each transaction before you start so you are aware of the steps and requirements and feel comfortable with the process. A good realtor and a good loan officer should be able to give you the steps and inform you on what to expect each step of the way.
Now that you are aware of what to think about before you buy, remember to make an informed decision, be ready with a pre-qualification and relax throughout the process. The end result is home ownership and nothing feels better than owning your own home.
Mercedes M. Pasqualetti is Tax Manager at HLM Financial Group located at 160 Clairmont Avenue, Suite 360 in Decatur, GA 30030. www.hlmonestop.com