Are you Ready to Buy a New Home?

Are you ready to own?


In Lesson 8

How much house can you afford?
Glossary
Take
the test

Top things to know

Are you ready to own?

Setting your budget

Picking a team

The hunt

Closing the deal

For sellers only


Mortgage Home equity loan Overnight avgs
30 yr fixed mtg 5.42%
15 yr fixed mtg 4.93%
30 yr fixed jumbo mtg 6.47%
5/1 ARM 5.14%
5/1 jumbo ARM 5.63%

Find personalized rates:


$30K HELOC 7.40%
$50K HELOC 7.24%
$30K Home Eq 8.23%
$50K Home Eq 8.14%
$75K Home Eq 7.85%

Find personalized rates:


Provided by
text ads here

Money 101 Lessons
Setting priorities

Making a budget

Basics of banking and saving

Basics of investing

Investing in stocks

Investing in mutual funds

Investing in bonds

Buying a home

Controlling debt

Employee stock options

Saving for college

Kids and money

Planning for retirement

Asset allocation

Hiring financial help

Health insurance

Buying a car

Taxes

Home insurance

Life insurance

Estate planning

Auto insurance

401(k)s

Home ownership means you no longer pay monthly rent for the roof over your head. You can do what you want with your house (within reason). When you leave, you can sell it to recoup the purchase price and - with any luck - earn a profit too.

But don't kid yourself. home ownership comes with a slew of disadvantages, responsibilities, and downright headaches.

So before going any further, consider whether your lifestyle and finances make homebuying a smart move.

TIP: High costs mean you should be prepared to say put. Except in a roaring real estate market, it usually doesn't make sense to buy a home you'll own for less than three or four years. Reason: the high transaction cost of buying and selling property means you could lose money on the deal. If you do make money, you'll pay capital gains taxes if you're in the house less than two years.

So ask yourself if you can really stay put for that long. Will you need to move because you are transferred by your current employer or a new one? Are you thinking of going back to school?

TIP: It may make more sense to rent On the financial side, one key question is whether it costs more, on average, to rent or own in your area. The rule of thumb is that if you pay 35 percent less in rent than you would for owning - including the monthly mortgage, property taxes, and any homeowner's fees - then it's smarter to continue renting.

Only if all those answers still point towards owning should you proceed to the next step - getting the money right.