Getting Ready to be a Homeowner
Owning a home of one's own is the American Dream. The National Association of Realtors conducted a study, and 87% of Americans said homeownership is the number one criterion for defining "the good life." Yet it can often be a long, difficult journey to homeownership. For many it is a dream that seems out of reach. With careful planning and preparation, however, homeownership is closer than you think.
According to the Columbus Board of Realtors:
- 26,660 homes in were sold in Central Ohio in 2004.
- The average sale price of the homes sold was $170,522.
- More than 60% of the homes were sold for under $125,000.
- As interest rates remain relatively low for the moment, and more affordable homes are listed, homeownership opportunities are excellent.
Steps to Homeownership: Can you afford it?
Before you become a homeowner, you need to decide if you can afford to buy a home. Although a home is a solid investment, renting may make more sense depending on your economic circumstances. Expenses to consider:
- Mortgage payment
- Homeowners insurance
- Real estate taxes
- Maintenance and upkeep
- Home furnishings
In addition to these expenses, you still have to be able to pay your other bills as well. To figure out a budget, remember to include groceries, laundry/dry cleaning, medical bills/prescriptions, credit card bills, child care, and entertainment.
You should chart your current expenses for a month and try to start a savings account for your new house. A variety of expenses will need to be covered, such as:
- Down payment on the house
- Closing costs
- Inspection fees
- Realtor fees/commission
Owning a home is an expensive and never-ending adventure. Go over your finances and weigh the pros and cons before you decide to take the plunge. It is much harder to get out of a house mortgage than a rental agreement.
How's Your Credit?
If you decide to buy a home, next review your credit score. If you have a good credit history, when you apply for a mortgage you will be eligible for a lower rate of interest. This means big dollar savings. One credit source states that the interest rate offered to a person with a score of 720 is 3.45% lower than the rate offered to a person with a score of 520. That adds up to a lot of money: Bankrate.com states that on a 30-year mortgage for $100,000, the difference works out to more than $85,000 in extra interest! (Check our Treasurer's Tips on Credit Scores.)
The Columbus Housing Partnership offers 8 hours of homebuyer education to prepare you for homeownership. Classes teach about credit scores, mortgages, realtors, and closing on a property. For more information, call them at 614-221-8889 or visit their website at: www.chpcolumbus.org.
Several local agencies offer financial help with your down payment. The Columbus Board of Realtors has a manual on their website at www.columbusrealtors.com. It lists various sources of loans and other financial assistance. Programs include:
- AmeriDream - www.ameridream.org
- Ohio Housing Finance Agency - http://development.ohio.gov/
- Columbus Downpayment Assistance - http://development.columbus.gov
- Franklin County Downpayment Assistance Program - http://homeportohio.org/pdf/FranklinCountyGuideline.pdf