There are a number of benefits when you buy a house. You don’t have to worry about the price of rent going up, you don’t have to worry about a landlord showing up at your property, and you have a place to call your own. You can paint the walls the way that you want and landscape the way that you want.
However, taking the step to buy a house is a big responsibility and it comes with a large price tag and lots of work. If you are contemplating buying a house here are some signs that you are ready.
There is a big difference between thinking you are ready to buy a house and doing the work to find out if you can actually afford to buy a house. Before you jump into searching for a house you need to know what you can afford in your budget. This includes taking into consideration all of the extras such as homeowner’s insurance, property taxes, and the cost of maintaining a home.
While there are some mortgage programs available that don’t require you to make a down payment – such as VA loans – the majority of buyers are going to need some kind of a down payment. Keep in mind that if you don’t have a 20% down payment then you will be required to pay for private mortgage insurance. This will increase your monthly payment even more.
One step to getting ready to buy a house is to have your down payment saved and ready to go.
If buying a house is going to take every last dollar that you have then you should probably wait until you have more money saved. There are a lot of unexpected problems that can come up in life and you don’t want to be caught unprepared.
Your credit score is important when lenders are looking at approving you for a mortgage. If you have a score of 750, lenders will see that you have excellent credit.
However, the lower your score goes the more likely it is that you will have a high interest rate or be denied for a mortgage altogether. If you think you are ready to buy a house, know what your score is and work to maintain or improve it.
Along with your credit score lenders are going to look at your debt-to-income ratio. If you are barely keeping ahead of your payments and have accessed all the credit available to you there is a good chance that you will be denied for a loan.
Before you purchase a house you want to make sure that you know where you want to be in 5 years. If you are unsure that you want to stay in the area then you might not want to make a purchase. You never know what is going to happen in the real estate market and if the market drops you could be stuck with a house you don’t want in the future.
If you have been able to work through this list and still feel that you are ready to buy a house, your next step is to get pre-approved. Having done this, you are well on your way to becoming a homeowner.