Tips for starting down the road to homeownership
The American dream of homeownership is within your reach! With the right planning, many people who rent the home in which they live could afford to buy one. Some consumers may be wary of buying a home or putting money into a home remodel with the economic times we currently face.
In actuality, now is a great time to buy. Interest rates are extremely low, and the F-M metro area is buffered to a certain extent from national economic trends. According to an economist with the National Association of Home Builders, our region has stayed relatively strong and is a bright spot on the national housing radar.
A prosperous and diversified business base is continuing to stimulate and grow the area's economy. The Fargo-Moorhead economy is solid and job creation is strong. In fact, North Dakota is one of the only states in the nation where home prices have continued to appreciate.
For those who would like a complete overview of the home buying process, The Village Family Service Center offers home buyer education workshops which include all elements of purchasing a home from beginning to end.
Joshua Huffman, financial counselor and home buyer education facilitator at The Village Family Service Center, says,"Going through the home buyer education classes at The Village allows people to learn how to get into a home they can afford and keep. This class makes sure they know all the programs that are available for purchasing a home."
Check out www.helpwithmoney.org or contact The Village Family Service at (800) 450-4019 for more information.
Educating yourself about the process and responsibilities of being a homeowner will most likely save time, stress, and even money, in the end. There are many programs available within the metro area to help you purchase a home. For more information, see the HBA of F-M's Membership Directory & Buyer's Guide at www.hbafm.com/directory. These incentives and tax exemptions are outlined beginning on page 154.
Before you find a home you like, one of the first steps is to determine whether you can afford it or not. Check out the following tips:
- Review your income. A certain amount in savings is sometimes needed to apply toward down payment and closing costs. There are loan programs available (e.g. FHA and VA mortgage programs) that require less cash payment at closing.
- Review your debt responsibilities. Consider how debt in relation to income will influence a lender's decision on your mortgage loan amount. Additional debt from house payments on top of existing debt might restrict your lifestyle.
- Get pre-approved and pre-qualified with a lender. A lender can help you find the right loan or assistance programs available to purchase a home. Some tools are included in the Membership Directory & Buyer's Guide that will help you estimate the house price you can afford: buyer's cost statement (page 146), amortization schedule (page 148) and loan application checklist (page 150).
- Review your savings. Be prepared for some costs that you cannot finance through your loan; there are some costs that must be paid at the closing, the day that you buy your home.
- Monthly expenses may increase. The purchase of your home will likely change how much you will need to spend on expenses every month. If you have trouble saving now, your finances might be too tight with the purchase of a home. If the time is financially right for you to purchase a home, consider the advantages that ownership has over renting.
- Think of it as scheduled savings. As a homeowner, your monthly mortgage payments serve as a type of savings plan. Over time, you will accumulate what lenders call "equity," an ownership interest in your house that you may be able to borrow against or convert to cash by selling the house. Renters continually pay rent to a landlord for as long as they rent without opportunity to build up equity.
Check out the incentives available through local jurisdictions or state governments by reading pages 154-158 in the Membership Directory & Buyer's Guide.
Home prices are reasonable locally, giving buyers a unique opportunity to find affordable housing. Most likely, you can get the house of your dreams and still have a budget for decorating.
The HBA of F-M's Membership Directory & Buyer's Guide is available online; or you may pick up a copy of this free publication at the HBA office, 1802 32nd Ave. S. in Fargo, and at several local businesses listed on our website: www.hbafm.com/directory.