Purchasing a Home

Purchasing a home is probably this largest purchase anyone will make in their lifetime. It is a major decision and should not be taken lightly by the buyers. Buying a home requires a lifetime of financially responsibility, a buyer needs to truely understand how much they can afford before purchasing a home. A general rule of thumb is your morgage should not exceed 25% of your income. But, you also need to consider the cost of owning your home, which includes utility bills, insurance, etc, these payments should also not exceed 25% of you income, but a good rule is your combined morgage and housing expenses should not exceed more than 36% of your income. Almost everyone who purchases a home will have to finance through a lending company. Because I work at a bank I see people nearly everyday come in with morgage loan applications. Right now rates are very low, and incentives for first time buyers are great, so there are a lot of incentives for someone to purchase a home in they are financially and personally ready to. Most people will choose to finance their home with a fixed rate morgage, which would be the same interest rate for the life of the loan. Others choose adjustable rates morgages which may have lower interest rates in the beginnings, but these rates normally rise as time goes on. You also need to be aware of financing fees before you begin to purchase a home. Finally, when purchasing a home you need to be aware of all the other debt you have, such as car loans, students loans or credit card debt. If you have to much debt before purchasing a home its probably a good idea to pay most of that debt off before you purchase a home which usually requires 30 years of payments!