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Make sure you are aware of all relevant costs; besides the purchase price
of the home, research property taxes, closing costs, insurance, and maintenance
costs. Below are some questions to help you determine whether you’re
ready to buy a house.
• Do you have a stable, documented source of income? Even if you have
lots of cash on hand, if you can’t prove that you have a reliable income
source, you may not be able to obtain a mortgage.
• Do you plan to live in the neighborhood for a while? If you don’t plan to
hold onto your home, it’s generally not recommended to purchase it: closing
costs, which can total $7,000-$10,000, and the high interest payments
at the start of a loan mean that short-term home ownership is usually not a
wise investment. While some people will rent out their home if they choose
not to live in it, not everyone is comfortable being an absentee landlord.
Generally, the longer you stay in a house, the more cost-effective home
ownership becomes. Although not necessarily applicable to every situation,
conventional wisdom suggests not buying a house unless you plan to
live in it for five years.
• Are you prepared to be a superintendent, or do you prefer to be a tenant?
Remember, you’ll be responsible for all repairs and landscaping in your new
home. If the roof needs replacing, you’ll foot the bill, which may total upwards
of $10,000.
Financial Impact
Home ownership impacts your financial situation in a variety of ways. For
help determining whether this is the right stage in your life for home buying,
considering your familial and financial circumstances, contact the LRRC at
(732) 942-9292.
Tax liability: For many people, home ownership creates significant tax savings.
Consult with your accountant to understand the impact home ownership will
have on your tax liability.
46 | 2017 Lakewood Home Buyer’s Guide