Should I buy a house?
Can I buy a house?
When and how should I buy one?

 

 

 

 

 

Should I buy a house?

 

Owning your own home is one of the dreams many people share. However, when it comes to making the decision, you often wonder whether buying a house is truly the right move and if you can realistically afford it. First, do you really need to buy a house? The advantages of homeownership include long-term asset appreciation, relief from rental burdens, tax benefits, and providing a stable living environment for your family. On the flip side, you must also consider the ongoing costs of maintenance, property taxes, and the risks of fluctuating home prices depending on the neighborhood.

 

 

Based on my personal experience, my family immigrated in 1990—37 years ago—without any connections, significant capital, or reliable information. At that time, the five of us lived together in a two-bedroom apartment while everyone worked hard. Although we have all settled down now, the first 10 to 20 years were extremely challenging. Looking back, even in my twenties 35 years ago, I was earning around $50,000 a year according to my tax returns. Had I planned better, I could have afforded to buy a house. Back then, the idea of owning my own home was almost unthinkable—I hadn’t even received our green cards, and reliable information was hard to come by without the internet. If I had purchased a small house or condo  35 years ago—and if I had either held on to it until now or sold it to leverage the capital—I might have paid off the mortgage by now or quickly secured a larger home or other assets. While homeownership does have economic advantages, for me, the emotional stability and daily happiness it brings are even more important. I hope you don’t miss the opportunities that my younger self, in her ignorance, let slip by.

 

 

If you buy a house that suits your income—without overreaching—and use your mortgage payments instead of paying rent, you can build equity over time. In addition, you can deduct the interest on your taxes, and home prices have risen considerably in the long term, a trend that is expected to continue due to steady population growth.

 

 

 

 

 

 

 

 

Can I Really Afford to Buy a House?

 

Thirty-five years ago, I never imagined that I would ever be in a position to buy a house. However, there are numerous home loan programs available today—programs for first-time homebuyers, government FHA assistance programs, options for self-employed or freelancers, and even programs for those without a green card. The problem is that many people are unaware of these opportunities.

 

 

When purchasing your first home, it’s wise to consult with a mortgage loan expert to fully understand your financial situation. This will help you shop for houses within your price range or plan your purchase over the next one to two years.

 

 

 

  • Income
    The most critical factor in loan underwriting is your ability to earn a steady income. You will need your tax returns from the past two years. Consistent income over these two years is essential, and changing jobs within the same field is generally acceptable. For self-employed individuals who may not have properly filed tax returns, some programs allow the use of bank statements as an alternative.

  • Expenses
    The loan amount is determined by subtracting your monthly expenses from your monthly income. Even with a high income, if your expenses are also high, your approval odds may decrease. Conversely, lower expenses can improve your chances even if your income isn’t very high. It’s a good idea to plan ahead and reduce your expenses where possible.

  • Personal Credit Score
    A higher credit score can help you secure a loan with a lower interest rate. Generally, conventional mortgages require a credit score of at least 620, while FHA loans may be available with a score as low as 500.

 

  • Down Payment
    Depending on your income, you might be able to put down as little as 3%. However, if your down payment is less than 20%, you will need to pay for Private Mortgage Insurance (PMI). Also, consider other fees and any upfront escrow deposits.

 

 

 

 

 

 

When and How Should You Buy a House?

 

Many people advise buying a house when home prices or mortgage rates are low. However, in my experience, it’s more important to base the decision on your personal circumstances rather than solely on market conditions. Since market conditions are beyond your control, waiting indefinitely might cause you to miss a good opportunity. When interest rates drop, more people rush to buy homes, which can make it harder to find a house you truly like.

 

 

Personally, I recommend buying a house you can comfortably live in for about five years—within your means—and then improving your situation by refinancing when the financial market improves or your circumstances change. Waiting around for interest rates to drop by a few percentage points might just waste valuable time.

 

Home Buying Process:

 

  1. Loan Consultation
    If you’ve had a steady income for the past two years and expect it to remain stable, consult a mortgage expert to accurately assess your financial condition. Determine your eligibility and the maximum amount you can borrow; if you’re ready, obtain a pre-approval.

  2. Home Shopping
    Once you’ve established a budget, use online platforms like Zillow.com or Realtor.com to explore neighborhoods and houses that interest you. Attending open houses on weekends is also a great idea. Employing a buyer’s agent can help you navigate the entire process up to closing, and typically, their fee is paid by the seller.

  3. Offer & Contract
    When you find a house you love, obtain an updated pre-approval letter from your mortgage expert tailored to that property, and submit it along with your offer. This letter is very persuasive to sellers. In short, buying a house isn’t as daunting as it might seem—be confident, consult with experts, and pursue your dream of homeownership.

  4. Appraisal
    Even after both parties negotiate a purchase price and sign the contract, and you consult with a mortgage expert to determine the best interest rate and fees, unforeseen issues can still arise. As part of the process, the bank will require an appraisal. If the appraised value is equal to or higher than the purchase price, all is well; however, if it comes in lower, the mortgage amount, interest rate, and fees may change, since the loan is based on the appraised value rather than the purchase price.

  5. Mortgage Approval Contingency Clause
    It is the responsibility of the buyer’s attorney to include a clause in the contract that allows you to cancel the agreement without penalty if your mortgage is not approved for any reason. It is essential that you retain a trustworthy attorney.

 

For more detailed information on home financing, please visit:

https://milestonepointinc.com/elementor-4799/

 

 

 

 

Terry Kwon / Licensed Loan Originator / NMLS #2620208

Loan Factory /NMLS #320841