Buying a house is one of the most important decisions you will make, both emotionally and financially. It will become your home—the place you raise your family, a space to unwind after a long workday, your safe haven.
However, envisioning yourself in a two-story colonial with three bedrooms and two bathrooms is not the same as being ready to buy it.
So, how do you know you are prepared to take the plunge into homeownership? Ask yourself these questions.
Am I financially fit?
Homeownership requires financial responsibility and stability. Unless you have a major lump sum in savings, you will need to work with a lender to determine what type of loan you may be eligible to receive. Before you do, vet yourself.
Credit score crunch
Keep an eye on your credit score. The better your credit score, the more likely you will be to qualify for a lower interest rate.
Do you have money put away? Are you able to use it for a down payment? Will there be funds leftover in case of an emergency? If you answer “no” to one or more of these questions, you may need to put a hold on your house hunt.
Debate your debt
A home is a good investment, but it is also comes with a mortgage debt. Are you prepared to take on the additional cost? Assess your current debt. Are you paying it down in a timely and consistent manner?
Lenders will review your employment history and income, verify rent and utility payments, and consider your debt before issuing a mortgage loan. The more stable your financial situation, the more likely you are to be entrusted with the funds you will need to purchase a home.
Can I afford what I want?
Mortgage calculators can help you determine what homes may be within your budget. You can input the cost of the home, your down payment and loan information to determine what you will owe on a monthly basis. If the mortgage payment fits your budget, fantastic! If it doesn’t, you may want to put your purchasing plans on hold until you’ve saved more money for a larger down payment.
Am I committed to staying?
Homeownership offers permanence, a place to settle down. If you aren’t ready to hang up your boots, you probably aren’t ready to purchase a house. Ideally, you will want to plan to be in your house for more than five years. Anything less may lead you to lose money in the buying and selling process.
Do I want the responsibilities that come with a home?
Owning a home brings with it great independence. You will be able to paint your walls, change out carpet for hardwoods, landscape your yard, whatever you prefer. However, with that freedom comes new responsibilities. You will be your own landlord. Repairs, lawn maintenance and overall upkeep may not be on your to-do list today, but will if you purchase a home.
Have I found an agent I trust?
Working with a real estate agent to buy a home is critical for first-time homebuyers. Your agent will listen to your needs and wants and help you seek out the ideal home. A buyer’s agent will also make professional recommendations on how to negotiate your terms and settle on a price.