Ask These 5 Important Questions To Get The Best Home

Having your own place is exciting and frightening at the same time. If you're considering renting or buying a place of your own, consider these five simple questions before you choose your home.

1. How much money do you have saved?

Evaluate 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.

We agree with Dave Ramsey's 7 baby steps toward wealth.  Work to keep at least $1,000 in savings for an emergency fund. It's also a good idea to have 3-6 months of living expenses to cover unexpected costs.  If you're thinking of buying, check out these 4 baby steps for home buyers.

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. Will you 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.

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 see these ideas. You may want to delay moving into a new home and take steps to raise your score. 

4. Have you factored in all the costs? 

Create a hypothetical budget before choosing a home. Find the average cost of local utilities like gas, electricity, water, trash pick-up and cable. 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 someplace, 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.

At Kennett Trust Bank we want you to have a successful financial future and a beautiful place to live. We invite you to keep reading our blog and contact us to learn how we can help you achieve these great goals.