So you are looking into buying a house? There may be many reasons why you want to do this. You may be looking for a place that you can call home, one where you plan to live in for the rest of your life. You may be relocating and want a convenient place near your place of work. You may be living in an apartment and are looking for something bigger, where you do not want to pay rent or you are looking for a smaller house, to save on costs. Chances are, unless if you won the state lottery or have already saved up the money, you will need to get a loan for your new residence. The question is how do you know if you are making the wisest decision? Not used only in business anymore, you can weight the strengths against the weaknesses and the opportunities against the threats in your house buying decisions.
Let’s assume that you have been thinking about buying a house that costs $100,000. You have been doing the wise thing by putting aside 10% of your weekly paycheck into your savings account and have built up enough cash where you can make a $10,000 down payment. This is a major strength. However, a few years ago, you fell behind on several credit card payments and medical bills. Even though you eventually did get these caught up and paid off, these negative marks will be on your credit report for seven years. This is a weakness, because you may not get the best interest rate on a mortgage. You may be paying more for your house than a person who has perfect credit.
There are external factors that affect whether you get the loan. Even if you have bad credit, as long as you have not filed for bankruptcy, your chances of getting a home loan are good. There is equity in the house and lenders use that as collateral. Plus with different durations of bank loans, the lenders make the house shopping affordable for you. These are both excellent opportunities in the housing market. However, along with the opportunities, there are threats. You may not be the only one looking at the same house. The other potential buyer is your main competition and he may offer a better offer on the house. Another threat is the economy. With constant rises in inflation, you have to ask yourself if you will be able to make the monthly payments five or ten years down the line.
Buy using the SWOT analysis you now know what strengths, weaknesses, opportunities and threats are. However, it does not end here. You can use it to change the weaknesses to strengths and threats to opportunities.
Since you do not have perfect credit, you can decide to wait for another six months to go house shopping to see if you can get a better interest rate. Another thing you can do is to get a flexible mortgage. This is where you have a set mortgage rate for two years. Then after that, if you make your monthly payments on time and keep up with your other bills, your interest rate will be lower.
You cannot predict what the future will hold for you. You may get a mortgage where the monthly payments fit into your budget. However, things may happen such as you losing your job or inflation. These best things to do to turn this threat into an opportunity are to figure your monthly bills, including the mortgage and other living expenses. Keep three months of living expenses in your savings account and do not touch this. Also, if you buy that dream house, pay extra on the monthly payment. Even by paying an extra $10.00 a month will help you save thousands in the long run.