Deciding to buy your first home is a big step in your life and can be a great investment. How do you know if you’re ready to take the plunge, though? First, take a look at these six considerations to find out if the time might be right.
1. What are your career plans?
If you’ve started working your way up the career ladder, you know that taking a promotion can sometimes mean that you have to make some pretty big changes, including moving. You probably don’t want to buy a home until your life is relatively stable. Finding a job where you plan on really working yourself into and somewhere you can plant roots is a great indication you are ready to purchase some sort of real estate.
2. Do you have a down payment saved?
How much do you have in savings? The general rule of thumb is that you should have 20% of the value of your new home already saved and use it as a down payment. This is a good rule to help you buy within your means instead of going overboard. It can also help cut down major costs when it comes to interest on your home mortgage.
3. How’s your credit score?
If you have a bad credit score, you could be denied for your loan. To get the best deal possible on your mortgage, find out where you stand with your score and if necessary how to fix your score with a website like www.creditrepair.com or by talking to your bank or credit union. They will have great tips and ideas to naturally bring your score up and be eligible in no time.
4. Can you afford a home?
If you have your heart set on buying a certain kind of house or a home in a certain area, there might not be a lot of wiggle room when it comes to price. As a rule, your mortgage should be no more than a third of your income.
5. How much debt do you have?
Whether it’s student loans, credit cards, or something else, most people have debt even before they buy their first home. If your rent is cheaper than buying a house, you may want to stay where you are so you can pay your high-interest debt off faster.
Investing in a home and putting your monthly payments towards your own property is a great idea and something that most people are working towards. But you do need to be aware if your are in the right place in life and how the other aspects of your finances figured out.
6. Do you have an emergency fund?
How much money do you have for emergencies? Losing your house because you don’t have enough money to pay the mortgage is the last thing you want to have happen, so try to have at least a few months worth of expenses saved. Life happens and expenses need to be covered, by holding off on purchase a few months or years, you are allowing yourself more time to get a better cushion between you and whatever life throws at you. This gives you the ability to barrow from yourself and not end up having to pay interest back on credit cards.
Basically, before you purchasing a house, you want to make sure that you won’t have to move soon after buying it, and you want to be financially stable enough so you can afford your home. This is a big decision and even though it is a great investment it is not something to be taken lightly. Make sure you have a financial plan and will be able to keep up.