10 Questions to Ask Yourself to Assess your Financial Readiness to Purchase a Property
April 25, 2007 by Maricel Ferrer-Custodio
Filed under Finance
1) Do I have a steady source of income?
2) Is there room for me to save with my present income?
3) Will there be enough money left to finance a mortgage, after I deduct all my living expenses and current loans from my present income?
4) Is my present savings enough only for the minimum deposit required or could I afford to put a bigger deposit?
5) Can I support my present lifestyle if I take out a mortgage?
6) Am I willing to assess my ability to pay for a mortgage by practicing first before actually taking out a mortgage?
eg. Saving the required monthly repayments, pretending that you’re paying your mortgage for at least six months.
7) Does this property I plan to buy match the amount of deposit required and the monthly amortization I can comfortably afford?
8 ) Do I have enough contingency funds for miscellaneous expenses after all my living and mortgage expenses had been deducted from the amount of money I have now.
9) Is my present income enough to absorb any increase in interest rates that would result to a higher mortgage repayment?
10) After answering all these questions, do I feel confident that I can take out a mortgage?
If you answered YES to the last question, then you can say that you are financially ready to take out a mortgage.
You can also have a look at my previous article which has some useful links to help you check and compute how much you can really afford to buy.
What a magnificent list of questions prospective buyers should be asking themselves! Almost all foreclosures and forced sales could be avoided if these questions were answered directly and honestly at the beginning of the process.