In 2016, nearly 1.8 million homes were bought by first-time home buyers.
Buying a house is a huge decision, one that some people might mull over for years.
However, there are a number of questions you can ask yourself to help you determine if you’re ready to buy a house.
Let’s take a look at seven signs that point in favor of becoming a first time homeowner.
- You’re Not Planning on Relocating Any Time Soon
If you know you’re going to be moving across the country next summer, then buying a home doesn’t make much sense.
However, if you’re confident you’re going to be staying in the same place for at least three years, it could make sense to buy rather than rent.
- You Have Steady Employment
Have you been working the same job at the same company for two years or more? Then you probably have the financial stability to take on a mortgage. Having steady employment also makes obtaining financing much, much easier.
- You Have Good Credit
You don’t need absolutely pristine credit to buy a house. However, if you have a credit score that is at least 640, you have higher chances of getting approved.
- You Have a Family or Plan on Having One
When you and your partner have children or are planning on having some soon, it can mean it’s time to buy a house. People with kids tend to want to live in a more quiet neighborhood rather than in an urban apartment.
Once your kids are in the school system, you’ll want be sure sure they can stay near their friends and in the same school. Buying a home ensures stability in your kids’ lives that renting simply cannot.
Buying isn’t just for people with kids. However, having kids can sometimes be what pushes people to become homeowners after years of renting.
- You Can Afford It
Buying a house is one of the biggest purchases that many people make in their entire lives.
You’ll need to have enough money for a downpayment, known that you’ll be able to afford the mortgage, and able to cover the cost of repairs upfront and overtime.
As far as a downpayment goes, the amount you’ll have to shell out will depend on the type of mortgage you get. While the downpayment isn’t the only upfront cost you’ll come across, it’s by far the biggest one. You might pay anywhere between 3% and 20% of the purchase price as your down payment.
If you are taking out a jumbo loan, you’ll need to put down between 15% and 30% as a down payment. When you receive financing through a USDA rural development loan or a VA loan, there are loan options that offer no down payment.
Paying a mortgage isn’t necessarily anymore expensive than the rent you’re likely paying. The difference is that when you pay a mortgage you’re increasing your equity in a home.
When taking on a mortgage, though, you’ll want to be sure that you can afford to pay it every month. The basic recommendation is that your debt-to-income (DTI) ration shouldn’t be any higher than 36%.
Check out these first time mortgage tips for new homeowners.
When you buy a house, it’s also important to understand that there will be maintenance and repair costs. When you rent, your landlord takes care of anything that goes wrong for the most part. When you own your own home, you’re the one that’s responsible for taking care of the home.
When looking into how to buy a house, you might find people who suggest you buy a home that needs repairs and fix it up yourself to save money. Be wary of this advice if you aren’t already highly skilled as a contractor or a DIY enthusiast. Fixing up houses that need major repairs can end up being way more expensive and way more time consuming than you expect even with conservative estimates.
- You Desire Ownership Over Your Space
While renting can be somewhat carefree, it can also be exhausting. Every month, you write a pricey check to help pay off someone else’s mortgage.
When you rent, you’re often not allowed to make upgrades, have pets, have a garden, or do many other things you could in your own home. Even if a landlord allows you luxuries like painting rooms and installing raised beds, there is a sense of futility because you know your investing in someone else’s space.
If you buy your own house, you have a freedom you could never find as a renter. You can undertake whatever projects you’d like, get that dog you’ve always wanted, and finally make an environment your own.
- You’re Ready For More Responsibility
If you’re wondering when to buy a house, one of the most important things to do is analyze you’re own desire for responsibility. Are you not yet ready to give up staying out at the bar late at night and socializing with friends? On the other hand, are you focused on your future and your savings more than you are painting the town red?
This is a place where you want to be honest with yourself. Owning a house and having a mortgage is a big responsibility with dire consequences if things go poorly. Buying a house can be great, but only if you’re ready to step up to the plate.
Are You Ready to Buy a Home?
It’s natural to be nervous when going through the steps to buying a home. Going through this list of questions should help you understand though if your nervousness is actually due to not quite being ready.
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