Am I ready to buy a home?

There are many factors to consider when making any big purchase, but especially when buying a home. You might need to adjust your spending and saving patterns and consider how owning a home will affect your long-term goals.

Sometimes the timing is right—and sometimes it isn’t.

There are rewards and risks that come with owning a home. Only you can decide whether purchasing makes sense for your current situation.

Benefits of homeownership

• Enjoy a sense of pride and accomplishment in owning your own home.
• You could take advantage of significant tax benefits. Tax-deductible items include mortgage interest, property taxes (up to a certain amount), home equity loan interest, discount points, and private mortgage insurance. Consult a tax professional to discuss your specific situation.
• While rent may increase over the years, total monthly payments of principal and interest won’t increase if you choose a mortgage program with a fixed rate.
• Your home may increase in value over time—meaning you may make money when it’s time to sell.
• You can borrow against the equity in your home to help fund improvements, consolidate debt, or for another purpose.
• Making mortgage payments can help boost your credit score.
• Privacy and stability
• You can make your home your own and decorate the way you want.

Risks of homeownership

• You’re responsible for maintenance and repairs to your home and your property. Those may include landscaping and grass cutting, fixing broken appliances, or replacing the roof.
• Your home may decrease in value over time.
• If you fail to make your monthly mortgage payment, you may risk foreclosure, which will impact your credit score negatively.
• There are upfront costs associated with buying a home.
• Building equity in your home can take time.
• The homebuying process can be complex.

Your path to homeownership

The path to owning a home is different for everyone, but there are some key points to consider.

• Work with an agent. A real estate agent can help you find the right home at the right price and walk you through the buying process.
• Understand loan options. There are different types of mortgages available, and it’s important to find the one that fits your priorities and your budget. A financial professional or mortgage loan officer can help.
• Save for a down payment. The amount needed for a down payment can vary depending on your type of loan, where you live, and the price of the home.
• List your home needs vs. wants. Consider your family size and circumstances to help separate the “musts” and the “nice-to-haves.”
• Get preapproved. The preapproval process can determine how much you may qualify for in a home loan.

Owning a home can have many benefits, but also comes with many responsibilities. It’s important to consider those as you determine whether you’re ready to start the homebuying journey.

Homeownership key terms

A mortgage is the agreement used to pledge a home or other real estate as security for a loan.

A fixed-rate mortgage has an interest rate that remains the same for the term of the loan. While the total monthly principal plus interest payment will stay the same on a fixed-rate loan, payments made earlier in the life of the loan will be made up of mostly interest and very little principal. This ratio shifts as the loan matures.

Foreclosure is a procedure in which a mortgaged property is sold to pay the outstanding debt in case of default.

Home equity is the difference between your home’s value and what you still owe on a mortgage. It increases over time and can be borrowed against.