What Does it Take to Own a House?

by Holly McGurgan ; Updated July 27, 2017

Owning a house is a dream for many people living in rental properties. While home ownership has many advantages, your decision to buy your own house should be made after careful consideration of your financial situation and your housing needs. Before you begin the process, you need to know what it takes to own a house.

Significance

Buying a house may very well be the largest purchase you ever make. Home ownership allows you to put down roots in a neighborhood and avoid the worry and expense of yearly rent increases. Because home values often increase as the years go by, home ownership also provide you with an investment opportunity. Looking at home ownership from a national perspective, ownership is the sign of a stable economy, as sales go down when the economy is weak.

Types

Home ownership is not limited to single family homes in the suburbs. Townhomes, condominiums, duplexes, cottages, converted barns, trailers and manufactured homes can be bought in rural and urban areas. Property can be owned by one person, which is considered sole ownership. Tenancy by the entirety provides co-ownership to a married couple. In this type of ownership, both people must agree before a house can be sold or refinanced and the property automatically goes to the other person if one of the owners dies. Two or more people can own a home using joint tenancy. When one person dies, the other receives the deceased's property share. You can also choose a tenancy in common, that allows co-ownership without survivorship rights. When one owner dies, his share in the property is awarded to his heirs.

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Benefits

Homeowners know that they will have an unchanging monthly payment amount for the life of their mortgage if they choose a fixed rate mortgage. Home ownership can often be an investment, as houses in many areas increase in value as the years go by. In addition to the financial considerations, home ownership gives you the opportunity to decorate as you wish and make changes and additions to your new house.

Considerations

Potential homeowners should take the time to develop a solid credit rating before looking for a house. Your credit rating will determine if you will be given a loan. Your interest rate will be determined by your credit rate, with loan applicants with the highest credit ratings receiving the lowest interest rates. Decide the maximum monthly house payment you can afford. You will find payment calculators at homefair.com and mortgagecalculator.org (see Resources). Before you decide that you can afford a particular price range, make sure that you can pay for your monthly mortgage payment, property taxes, homeowner's insurance, utilities, car loans and any other fixed monthly expenses that you may have. Realize that all houses need repairs from time to time and you'll need to set aside some money each month for a repair fund. Look at listings on the Internet to determine what style of housing you prefer and where you would like to live. Meet with several realtors to discuss your needs and the services that they can provide you. Although you can find a house on your own, realtors have access to the Multiple Listing Service and may be able to alert you that a house is available before it appears on the Internet. Ask friends and family members in neighborhoods that you like if they are aware of homes for sale in their neighborhoods. Some houses are never listed, but are sold through the word-of-mouth method. Check out fsbo.com and owners.com for listings of homes for sale by their owners. New development listings appear in the Sunday newspaper in many cities. If you are interested in new construction, be sure to buy the Sunday paper for all locations that interest you.

Prevention/Solution

If you can't afford the standard 20 percent down payment, don't assume that you won't be able to buy a house. Ask your lender if she can recommend loans that don't require a 20 percent down payment. Look into Veteran's Administration loans if you are a veteran and Federal Housing Administration Loans. Both provide loans at lower interest rates.

Warning

Hire a home inspector to inspect any property you are considering buying. Some states require an inspection, but if your state doesn't, think about hiring an inspector on your own. A home inspector will carefully evaluate your potential home and give you a report of any potential trouble areas. Having a home inspection can save you from buying a house with issues that would be expensive to repair.

About the Author

Working at a humane society allowed Jill Leviticus to combine her business management experience with her love of animals. Leviticus has a journalism degree from Lock Haven University, has written for Nonprofit Management Report, Volunteer Management Report and Healthy Pet, and has worked in the healthcare field.

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