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Are You Ready to Buy Your First Home?


By Bennett Whitlock, CRPC® Private Wealth Advisor

How do you know if it’s the right time to venture into home ownership? Start by answering these questions:

  • How long will you be in the area? Because of the transaction costs that come with buying and selling a home, it typically takes three to five years to break even.
  • How much can you afford to pay? Your mortgage payment and your total monthly debt should not exceed your gross income by more than 25 percent and 33 percent, respectively. Also, keep in mind that you’ll also incur other expenses, such as utilities, homeowners’ insurance and property taxes.
  • What’s the housing market like in your area? The real estate market differs by city, state and region. Compare the costs of renting and buying in your area to determine which makes the most sense in your situation.
  • Can you cover the down payment? Most traditional mortgage brokers require a 20 percent down payment to avoid Private Mortgage Insurance (PMI). PMI costs typically range from 0.5 percent to 1 percent of the annual loan amount.
  • What’s your credit score? Banks use credit scores to decide whether to approve home loans. If your credit score is good, you can breathe easy. If it’s not, take action as quickly as possible to improve it.
  • Are your financial documents in order? When you apply for a mortgage, you’ll need to provide W-2s or 1099s and federal tax returns for the past two years, a current year profit-and-loss statement if you’re self-employed, bank and investment account statements for up to the past three months, 12 months of cancelled rent checks and bank statements if you rent and recent pay stubs and proof of other income.
  • Do you have an emergency savings fund? Saving enough to cover three to six months of your living expenses can help you weather unforeseen events and handle unexpected house expenses, such as a broken appliance or plumbing emergency.

Bennett Whitlock, CRPC®, is a private wealth advisor and managing director with Whitlock Wealth Management, a franchise of Ameriprise Financial Services, Inc. Learn more at or call 703-492-7732. 

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