Buying a home is perhaps the largest financial undertaking you will encounter in your life. You’ll be dealing with large amounts of money and making decisions that can seriously impact your future. So, how do you know when you’re ready? Is it after you get married? Or maybe once you’re going to have a baby? Or what about after you get settled in an area for a while? If you’re starting to wonder if now is the right time to buy a house, it’s probably the right time.
Here’s 10 signs you are ready to buy your first house.
Save for a down payment
The first step in being ready to purchase a home– having a nest egg of savings that could go towards a down payment. Many down payments require 20% of the home list price. Realize that the more money you put down, the lower your monthly payments will be. So, you can put down 5% as a down payment, but your monthly payments will be a bit higher and you’ll have to pay extra for PMI (private mortgage insurance) because you didn’t put down 20%.
Get a good credit score
The next thing to prep for buying a home is having a solid credit score. Now, your credit doesn’t have to be perfect, but the higher your score, the easier the pre-approval process will be and the more money you’ll be pre-approved to spend on a home. Do things now to make your credit score soar– like paying all bills on time and in full and paying off loans or debts if you can. Purchase things with a credit card and then pay it off because the term is up. Making big purchases and then fulfilling the loan will help your credit be solid. Don’t rack up lots of debt– that’s not something a mortgage lender will want to see.
Expect extra fees
Save for that down payment and then save some more because you don’t want to experience sticker shock when you sit down at the closing table. As a buyer, you’ll have to put down a deposit on the home, the down payment, pay for an inspection, title insurance, and other fees. It could be up to 3% of the price of the home.
Do your housing market homework
Since you’ve never bought a home before, you may not know what to expect. Do some research to learn about the home buying process and what you can do to make it go smoothly. It’s up to you to find the professionals who can help you out and to understand the undertaking of buying a home.
Know how much you can spend
Don’t just go in with a ball park figure– do some math! Use a mortgage calculator to find out exactly how much you can afford in a house. Mortgage calculators will tell you how much your monthly payment will be, based on the home price, the down payment amount, the type of loan, the interest rate, and the loan length. Play around with numbers and set a budget for yourself and stick to it. Buying a home far above your budget will, in many cases, only lead to misery, so make wise, practical decisions. Take a careful look at your budget.
You’ve created a wish list
If you’ve been looking at homes in your area and noting things that you’d like to see in your future home– good job! Now’s the time to pay attention to detail and to really figure out what speaks to you. What do you like best about a home? Is there a certain style that you like or do you want specific features in your house? Make a list of all the things you would love to have in your own home.
You know what your must-haves are
Now that you have your wish list, it’s time to make a must-have list. The items on your wish list are fine, but the things on your must-have list are things you can’t live without in a house. This would include things like; the number of bedrooms and bathrooms that you need, whether or not you need a yard or a garage, if you need a finished basement space, or what the storage situation is like in the home. Granite countertops and brand-new wood flooring are wants, not needs and they are also things that could be updated in the home later on. Focus on making sure your future home fulfills the items on your ‘must have’ list first before tackling our ‘would like to have’ items.
You know it won’t be easy
Finding a home isn’t the easiest process. It’s time-consuming, stressful, and difficult. You can’t just waltz in and get the very first house you look at. This will take time, energy, and effort. If you know the home buying process is hard, then you’re prepared.
You’re ready to make a smart decision
There is no such thing as the perfect house. There isn’t usually an ‘aha’ moment when touring a house that tells you to buy it. You’ve just got to go with your gut and with what feels best to you. Realize that your first home won’t (and shouldn’t be) as nice as your parents home. This is your first home. Don’t get in over your head. Don’t wait it for the elusive perfect house while other great homes are passing you by.
You’re there to stay
Finally, you’re ready to buy a house if you know you want to make it your home. If you have a job that will keep you in the area for the next 5+ plus years, you’re ready to buy a home. Buying and then selling a home again in under 5 years is hard work and usually comes at a loss. The longer you stay in a home, the more equity you’ll have in it, so make plans to stay if you can.
So, do you think you are ready to buy your first home? I’d love to guide you in this wonderful journey! Call me to take advantage of my expertise, knowledge, and enthusiasm!