How to Buy Houses

Owning a big house is the American dream. Maybe you want to win the lottery and be able to invite everybody back to your mansion for a barbecue, or perhaps you want to be a big-time movie star lounging around your Beverly Hills home while taking a quick break to thank the Academy. Regardless of the dream, a big beautiful house is definitely in the picture. But before you even start out on that road, you first have to be sure that you really want a house. Owning a house has many advantages, but depending on your personal situation, you may be better off renting an apartment.

With an apartment, you're limited in how much you can personalize your living space, and you don't build equity or get tax credits, but you can move when your lease is up and you always have a landlord who's responsible for repairs.

A house affords you the freedom to remodel, builds equity---though it can lose equity, too---and gives you exemptions on your personal taxes, but also locks you in until you are able to sell the house, and puts the responsibility for all repairs on your shoulders. The biggest thing about owning, though, is that the house belongs to you. It's your home, and that's pretty great in itself.

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Instructions

Make Sure You Can Afford to Buy a House

1. Are you good at keeping to a budget? Is your credit in good standing? Do you have tremendous amounts of outstanding debt? If your answer to these questions is to stare at your feet in embarrassment, you may not be in the best financial shape to buy a house at this time. Before you start looking at houses, take a few steps to get your finances in order.
   
   Pay off any outstanding debts, and don't incur any new debts. Mortgages are based on "debt-to-income" ratios that analyze what you spend monthly compared to what you bring in. Taking on debt throws the ratios out of your favor.
   
   Put yourself on a budget. Get a rough idea of how much a mortgage will cost you by consulting an online mortgage calculator (see Resources). Remember, along with mortgage payments, you're going to have other costs--like home repairs, home improvements, home insurance and general home maintenance--that you didn't have when you were renting. You're going to need every extra penny you have.
   
   Consider the real estate market so you know where the market stands at a given moment. Remember that different cities have different real estate trends, and it's much more difficult to find an affordable new house in an up-and-coming city. Search for better markets in different cities and suburbs.
   
   Either way, you take a chance. If you feel you can afford it and you're ready to buy a house, then by all means, now is the time to find your new home.

Next: Get a Mortgage

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Resources

• Mortgage Rates Calculator
• TransUnion