Buying a House? Here's What You Should Know - Research Paper

Introduction

Owning a house is what most people desire. The feeling of not having the landlord knocking on your door for rent payment or merely the essence of having a private space. This is a research paper that I have compiled using information collected from surveys from business professionals and property investors. At the end of this paper, we should be able to understand the importance of a saving plan, seeking professional financial advice, and the different alternatives in purchasing a dream home.

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Factors to Consider Before Settling on Home Ownership

Before settling on your dream house, it is essential to consider some important considerations. The first most crucial step for becoming a homeowner is budgeting your finances. Budgeting is possible by accounting for the monthly and yearly expenditure of earned income. Every dime spent must be considered for the last cent. Once a physical list is available, it is advisable to compare your income earnings to the spending. Expenditure to income comparison is useful in helping you know how much money is left for saving, if any. In the scenario where there is no money left after expenses, there is a need for consideration of reducing the unnecessary costs or postponing your plans of purchasing a home if the spending is essential.

Another important consideration before deciding to purchase a home is clearing any pending debts. When buying a home, the buyer may seek mortgage assistance issued by financial lenders. In a case where the borrower has pending debts, chances of securing a mortgage are lowered. The ratio of your earning to that of the obligations you have must be a decreasing ratio. Your debts must not be higher than your income amount. Having debts should not be a discriminating factor. If you have been borrowing funds and repaying without delay, the credit scores will reflect a good recommendation to the lenders enabling you to secure a bigger loan. Loan lenders are usually keener on the borrowing history of an individual, so there is no need to feel discouraged if you are a frequent borrower. You should count it as an added advantage.

Coming up with a saving plan is very useful to drive you to achieve the goal of being a homeowner (Halket & Vasudev 2014). Moneylenders encourage their clients to save money as it is a necessary procedure in debt acquisition and payment. Remember to keep a proper track record of your savings and again for a fruitful saving process, choose a bank with reasonable interest rates to help in saving your money. Saving money in the house is never a good idea as temptations of excessive spending may cross one's mind knowing that there is cash lying around somewhere in the house. Once a working saving plan is in place, it is time to start searching the available homes for sale and look for one that is in line with your budget range and possible savings. Talk to a professional estate agent who will help in financially advising you on which house is suitable for your needs with relation to the surrounding environs of your home location and development growth rate (Immergluck & Smith,2003). For those who feel agent services may need them to further away in costs, you can have background education on the suitability of housing concerning the developing economy. Finding a home is not easy to do the task, so it requires a lot of patience and hope.

Alternatives to Buying Homes

In our current economy, the cost of purchasing a home varies given different scenarios. The location of the house, the modernity of the structure, demand for housing in a given area and so forth. Research proves that the property market is introducing individual policies that hinder the ease of going into home purchasing (Hoghes, 2016). However, there are possible alternatives for maneuvering into the property ownership sector. One viable option that most people forget to consider is upgrading their professional skills securing a higher wage. An increase in salary income will help have extra money to put in savings for purchasing a house.

Professionals propose joint ownership of a home either with a friend, relative or spouse. In so doing, the costs of purchase are split in equal, where both parties play a similar role of ownership. Joint ownership is of great benefit as the saving duration is lowered, and lower mortgage acquisition is made possible which can be settled comfortably. However, it is vital to ensure that partner interests are legally protected. The individual you chose to partner with must be civil in nature and one you get along with well. Establishing a partnership contract, clearly stating the terms and conditions of the partnership as (Hoghes, 2016) states, will help to minimize any complications within the set agreement. Parent or guardian assistance is also a handy alternative in homeownership. If the parent is in a stable financial status, they can aid in partial deposit payment or loan repayment. Although financial aid from the parent may make the buyers financially dependent, short-term relief from financial constraint is achieved.

Investment buying is a suitable option for property ownership as the buyer gains both financially and status wise. Once the bought property gets tenants, the mortgage payments will slowly decrease, given the rental income. Most investors, however, state that investment buying is adequate only if the property owner already has a rent-free residential area (Hoghes, 2016). It is insensible to put the property on rental service, yet the owner is also paying rent for his shelter elsewhere. The final alternative which is commonly known as leasing, consists of an allowance scheme where rent Is paid for a given period before fully owning the property. Leasing schemes are very affordable, and the potential future property owner incurs no extra costs of moving in. During the lease period, the tenant must be on par with rental payments to avoid ownership denial. The most significant advantage of property leasing is the ability to join the ownership market without issuing a deposit. If, by any chance, the buyer has a change of heart in purchasing the house at the end of the lease period, he/she is allowed a prior notice issue without additional payments.

References

Halket, J., & Vasudev, S. (2014). Saving up or settling down: Homeownership over the life cycle. Review of Economic Dynamics, 17(2), 345-366.

Hoghes, D. (2016). Buying a house: 3 alternatives if you're priced out of the market. Retrieved 20 November 2019, from https://www.moneysense.ca/spend/real-estate/buying/buying-a-house-alternatives/

Immergluck, D., & Smith, G. (2003). Measuring neighborhood diversity and stability in home-buying: Examining patterns by race and income in a robust housing market. Journal of Urban Affairs, 25(4), 473-491.