Common Questions About Getting Started With Owning a Home

How do I know if I am ready to buy a home?

Ask yourself these questions and if you can answer "yes" to these questions, you are probably ready to buy your own home.

  • Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2 - 3 years? Is my current income reliable?
  • Do I have a good record of paying bills?
  • Do I have few outstanding long-term debts, like car payments?
  • Do I have money saved for a down payment?
  • Do I have the ability to pay a mortgage every month, plus additional costs?

How do I begin the process of buying a home?

Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment? How much space do you need? Do you have access to land? After you answer these questions, make a "To Do" list and start doing casual research.

How does purchasing a home compare with renting?

The most significant advantage to renting is being generally free on most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

Owning a home has many benefits. When you make a mortgage payment, you are building equity, which is an investment. Owning a home can also qualify you for tax breaks that actually lower your monthly out-of-pocket costs. Given the freedom, stability, and security of owning your own home, it is worth it.

How does the lender decide the maximum loan amount that I can afford?

The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing expenses and non-housing expenses. Non-housing expenses include long-term debts like car or student loan payments, alimony, or child support. According to Salt River Financial Services guidelines, the mortgage payment combined with non-housing expenses should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.

How can I determine my housing needs before I begin the process?

Your home should fit the way you live, with spaces and features that appeal to the whole family. Before you begin considering home ownership, make a list of your priorities - such as location and size. Is your allotment accessible to water, electricity, and other service related needs? Will there be any rights-of-way issues with the allotment? Will the allotment pass the "Homesite Withdrawal" process (see the SRPMIC Realty Department for more information)? What kind of amenities are you looking for? Establish a set of minimum requirements and a "wish list". Minimum requirements are things that a house must have for you to consider it. A "wish list" covers things that you would like to have but are not essential.

May 2022