What You Need to Know Before Buying a Home in the Current Economy

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Home Ownership in the Current Economy

 Have You Always Wanted To Own Your Own Home? What You Need to Know Before Buying a Home in the Current Economy     The current economy — and specifically, the dull state of real estate growth — means that many people are tempted to buy houses while their prices remain low. It is that very same economy, however, that makes people self-conscious about whether or not they have enough funds to be able to actually afford a house.

Personal Finance Expert Suze Orman has some guidelines for buying a home. Follow her guide below to see if you are financially stable enough to put an offer in on a new home.

Home Ownership in the Current Economy

 1.) Have a 20% Down Payment - Determine what your target purchasing price is, and then ensure that you have enough money to put down 20% on the purchasing price. If you want to buy a $200,000 home, for example, you need to have $40,000 for a down payment.

2.)  Have an 8 - Month Emergency Fund -  Factoring out the money you have saved up for a down payment, you need an additional savings account that you can consider your 8- month emergency.  This account should hold enough money to satisfy your lifestyle for 8 months, should your income flow stop today.

3.)  The Home Should Be a ‘Steal of a Deal’ - In this housing economy this is no reason to make a offer on a house unless, it's a huge steal.   It's a buyers market so look for great prices and go in low. 

4.)  Be Able to Afford the Payments on a Fixed 15-30 Year Mortgage -   Consider how long your mortgage agreement will be, and also consider the interest rate on your loan. All of these things will factor into your monthly payment, which you want to make sure is an affordable target price for you and your family.

5.) Have Money to Pay the Property Tax - Property taxes can add (at least) hundreds of dollars to your monthly payment, so they are not to be ignored. Factor in your monthly property tax fee to ensure that you can afford taxes on top of your mortgage. Most homeowners are eligible for a homeowners tax refund, so you may get some of your property tax dollars back… but for financial security, don’t count on it.

{Tips from Suze Orman found on Anderson Cooper's Website, huge thank you to both of them!}