Royal Oak, MI Real Estate Source First Home Purchase

With interest rates low, many renters are starting to think about purchasing a home of their own. While simple rental cost vs. mortgage cost comparisons can be very attractive, buying a home is a serious commitment, and there are many factors to consider:

How long you plan to live in the home.
Selling a home costs money.  If you potentially may have to move in the short term, the value of your home may not have appreciated enough to cover the costs of buying and selling.

The length of time that it will take to cover those costs depends on various economic factors. Average appreciation tends to sit at around 5% per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs.  The real estate market can be particularly volatile, however, and dramatic swings up and down are not uncommon.

How long the home will meet your needs.
What features do you require in a home to satisfy your lifestyle now? Five years from now? People tend to remain in homes longer than they initially intend, primarily due to the work and expense associated with moving.  Therefore it is worth considering a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

Your financial health - your credit and home affordability.
Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, people with poor credit tend to pay far more to borrow.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. It is, however, important to stay within your comfort zone.  Purchasing a house involves many up-front and ongoing costs, and the stress of worrying about those costs often outweighs the satisfaction that may come from owning a slightly nicer home.

To determine how much home you can afford, talk to a lender or go online and use a home affordability calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making loans customized to a particular person's situation.

The "28/36" rule means that your monthly housing costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential, and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, it’s important for you to know your options.

Where the money for the transaction will come from.
Typically, homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary - if you can prove that you are a good financial risk for a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender. High-ratio mortgages can be a good option for those who haven’t managed to save a large chunk of money (who has?), but naturally, these have additional costs associated with them.

The ongoing costs of home ownership.
Maintenance, improvements, taxes, and insurance are all costs that are added to a monthly house payment. If you buy a condominium or townhouse, a monthly homeowner's association or maintenance fee will be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your Realtor® and your lender aware of your desire to limit these costs.

If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

 

Knowledge and Experience

If you are interested in the Royal Oak housing market, trust in our experience and knowledge of the area. We are a small team dedicated to just the Royal Oak area housing market. Our diverse backgrounds are in real estate brokerage, development, financial planning, lending and law. Contact us to recieve personal attention and advice not found with any other agent.

 

With experts in this niche market of Oakland County, we can best represent buyers, sellers and renters to help them make the most informed decisions. Contact Us to learn more about the Royal Oak Market.



Single Family Homes

Buy or Rent a single family residence in Royal Oak, MI. We can help you to find your new home today.

Foreclosures in Royal Oak

Learn about foreclosure opportunities in Royal Oak, MI. Finding a great deal in the foreclosure market can be difficult, you need to be prepared to act fast.

Lofts in Royal Oak

With so many deals out there right now in the loft market what is the best deal? There are so many features and options available to each unit that appeal to almost any buyer.


News

Film Crew Homes
15. 01. Providing production crew accomodations to the film industry FilmCrewHomes.com.
Foreclosures in Royal Oak
15. 01. Learn about foreclosure opportunities in Royal Oak, MI. Save more on your new home..
Royal Oak, MI Property Taxes
15. 01. Understand your Royal Oak, MI property tax, tax assessment and ensure proper tax value..
What to do in the city of Royal Oak, MI
15. 01. Learn about the city of Royal Oak, MI, dining, shopping, events inRoyalOak.com..
Sell Your Property in Royal Oak, MI
15. 01. We have the solutions to effectively market your property, create a marketing plan for your property..
Buying Your First Home
15. 01. Learn about purchasing your first home..

Contact

Ryan D. Richmond
real estate consultant
T. 248.470.8533
ryan@royaloakguide.com