Considering Your Finances: Is Home Ownership the Best Choice?

by Denise Mason 02/01/2023

Whether you’re planning on buying investment property or a new home, there are financial factors to consider. Knowing the details of your financial situation will help you make the best decision and help avoid unnecessary stress. If you’re trying to decide between renting and buying, here are some of the main financial things to go over:

Savings

Most financial experts advise you to save up to 6 months of emergency savings before you buy a home. Emergency savings are always a good idea to have, but when you’re considering purchasing a home, it becomes especially important. Before making a major investment, make sure you have the means to stay afloat in case something goes wrong.

Down Payments

It’s possible to purchase a home with a tiny down payment, but even the lower percentages are thousands of dollars. The bigger the down payment, the less money you owe to your lender. For this reason, many potential homebuyers opt for a larger down payment both to save on accrued interest and private mortgage insurance.

Debt-to-Income Ratio (DTI)

Most lenders will consider your debt-to-income ratio as part of your qualification for a loan. Luckily, this ratio is simple to calculate yourself. To find your own DTI, divide your monthly expenses—including loan and credit card payments—by your monthly gross income. This will give you a good idea of how you stack up compared to lender requirements.

Credit Score

Higher credit scores typically mean better chances of being approved for a lower interest rate on a mortgage. Your credit score comprises many financial factors. You can improve it by lowering your credit usage and paying your bills on time. While it might not seem important, even a percentage point matters for getting a good interest rate.

The financial part of home ownership can be overwhelming, but as long as you know the important metrics, you will make the best decision for your own situation. Keep these financials in mind to make the best choice.

About the Author
Author

Denise Mason

Hi! I'm Denise Mason. WELCOME to my Website! Being a full-time REALTOR® gives me the opportunity to assist in achieving your wants, desires, needs, and priorities in selling or finding a home. My goal is to take care of my real estate clients by providing an exceptional, no drama experience that you not only deserve but should demand in the hectic and competitive marketplace of today. I work closely with you throughout your entire real estate transaction. I work to be your family REALTOR® for life. Success begins and ends with good communication. I love what I do and do what I love! I am positive, enthusiastic and truly enjoy people and the real estate business. My commitment to you, my client extends far beyond a single transaction. My goal is to communicate, educate and exceed expectations! As the daughter, wife, and mother of active duty and retired service members, I've had numerous relocation experiences; renting, buying and selling a home. I grew up in Arlington County, VA and lived there for more than 20 years. Upon my husband's retirement from the Army we could think of no better place to call home than Virginia, the place of our childhood. I have been a Prince William County resident since 1997. We have raised and educated three children in the Prince William County School system. My family is my pride and priority which makes me no different than you or any other individual who wants a safe and comfortable environment for yourself, family and friends. I look forward to helping you achieve your real estate goals. Call me at 703-283-0969 or email me so we can meet over tea or coffee & I can get to work for you!