Buying a Johnson City TN home is a huge undertaking. When you buy a home you should consider it a major accomplishment, but it’s also a huge responsibility. It’s important to understand all the pros and cons of homeownership when you decide it’s finally time to take the plunge and stop renting.
Even when you feel like you have saved enough for a down payment, the decision to buy isn’t always an easy one to make, and some people find themselves tussling with the question of whether they should put off homeownership for a little while longer.
After you make the initial down payment, the ideal situation is that you’ll have money in the bank to cover repairs, upgrades and furniture, among other expenses. Unforeseen items can add up very quickly, and if you’re not careful, you may end up feeling house rich and cash poor.
Not only are you paying for the mortgage, but you’re also responsible for all repairs to the home. Maintaining the property, paying property taxes and home owners’ insurance are just the start. In fact, according to a Bankrate survey, 21% of millennials regretted buying a home because maintenance costs were too high.
Rent Continues to Rise
While there are reasons you might want to consider renting, there are arguments for not doing so. According to a new report from CoreLogic, rents for single-family homes increased 10.2% nationally in September year over year, up from a 2.6% rise in September of last year. Rent growth is strong in every price tier, but strongest at the very top.
While 93% of consumers said they believe owning a home is a good investment, according to a separate CoreLogic report, competition in the home buying market is forcing more potential buyers to remain renters.
Get Pre-qualified Before Shopping for a Johnson City TN Home
It is always advisable to get pre-qualified for a mortgage before you begin the home search process. Keep in mind, once you’ve found the perfect home and your offer is accepted, it can take several months to wrap up the whole process. Indeed, during this time you’ll need to be super careful to maintain your credit score and avoid spending large sums of money until you close on the property.
A lot of first time home buyers make the mistake of going out and buying new furniture and things for their new home before they close. This can affect your credit score and cause issues when your lender pulls your credit again before going to the final closing. There are many cases where potential homebuyers were pre-qualified for a mortgage, only to find out they no longer qualify prior to closing. There are many things that can cause a pre-qualification to go amuck. One reason, the income ratio is out of kilter with the ratio figured during the pre-qualification process. Another reason, the buyer’s credit score dropped due to higher spending ratios on credit. The best advice is, avoid buying anything prior to closing, especially on credit. Doing so could change things from when you were pre-qualified.
Is Buying a Home Right for You?
Buying a Johnson City TN home as a first-time home buyer is a new adventure. If you’re not 100% certain you want to buy a house, then don’t. It can also be a very emotional process, so if there are any questions or feelings of uncertainty, you may not be committed to buying. Also consider how long you think you will live in the house you’re buying. Experts advise if you aren’t sure you’ll be in your new home for at least 5 years you may want to re-think buying. With mortgage and closing costs, it could take you 5 years to recoup the up-front costs when selling. There is no guarantee a home will appreciate in value enough to cover up-front costs within 5 years, so renting may be the best bet.
Financial Considerations When Buying a Johnson City TN Home
Before you decide to buy a home — even if you already have a down payment saved — make sure you cover three essential financial bases. First, have an emergency fund with at least three to six months’ worth of living expenses saved up. Then make sure you aren’t carrying a lot of credit card debt, since it’s a high-interest debt that can really eat into the amount of money you have left each month for saving and spending. If you want to aggressively pay down credit card debt faster, consider using a balance transfer card with an interest-free intro APR period. This way, you can hack away at your balance without paying additional high interest costs. And lastly, make sure you’re already contributing enough to your retirement or 401(k) account to be eligible to receive employer matching.
Buying a Johnson City TN home doesn’t mean you should forego saving for retirement. And not contributing enough for the match means you’re leaving retirement money on the table.
These steps are, of course, equally crucial even if you think you’d rather continue renting a home. Regardless of your homeownership ideas and plans, forming these good habits can strengthen your financial standing over time so you will feel more confident when going after your goals and dreams.
Don’t Rush Your Decision
Homeownership is one of the biggest financial decisions you’ll make. Don’t rush it just because interest rates are low, or because you think you’ll miss an opportunity to make money from owning a home. Decide first and foremost whether owning a home versus renting a home will provide you with the flexibility you may need, should a career move be necessary. Maybe you’re thinking of making a career switch in the next one to two years, and you’re open to pursuing opportunities in other cities — this may be another instance where you need the flexibility of renting so you can easily pack up and move for your career when you need to.
If you have any questions about the Johnson City Tennessee housing market, mortgage lenders available, or our exclusive buyer agency services, give us a call at 423-283-4677 or send us a message, and we will get back to you as soon as possible! As an exclusive buyer’s agent, we are always looking out for your best interest when buying a Johnson City TN home.