Is Owning a Home Right
for You?

Prices and rates have dropped and perhaps you've seen a few tempting "deals." But being tempted and being ready to buy a home are not the same. Ask these questions before you decide.

How important is your goal? Are you willing to evaluate every financial decision in terms of how it affects your homeownership goal? A home is not an impulse buy. It's like marriage: the wedding is not the goal, it's just the beginning. When escrow closes and you're handed the keys, you've begun a long-term relationship that requires commitment.

Are you willing to sacrifice? Owning a home may require changes in spending, saving and budgeting habits. Are you willing to give up dinners out, an extra pair of shoes, a plasma screen TV? Can you save the 20% down payment required? Recognize that financial decisions in the past five years affect your ability to buy a home, while budget decisions in the next five years affect your ability to keep your home.

Test yourself. When you're ready, try "practice payments." For instance, a $300,000 home with a 20% down payment ($60,000) leaves a $240,000 mortgage. At a 6% rate for 30 years, the payment is $1,440.* Add property taxes and homeowner's insurance, and the monthly obligation is $2,220. Now, deduct your current housing payment and pay the extra amount into a savings account for a year – and leave it there. If your current payment is $1,000, pay your savings account $1,220. Are you comfortable with the payment? If the answer is yes, you're ready to buy. Better yet, you now have the beginning of a nice down payment or a solid "emergency fund," an essential for every homeowner.

Buying the home of your dreams requires some serious consideration. When someone loses a home to foreclosure, their dream is slipping away. Make sure your dream stays solidly within your grasp by being prepared.