With the economy rebounding, it may be a good time for those who are ready to think about buying their first home. For many people, owning a home would be a dream come true. There are many factors that should be taken into consideration to figure out if you are ready to take out a mortgage. Buying your first home can come with a lot of anxiety when you don't know for sure if you are ready. Below are some top signs that may assure you you are more than ready to start the process of buying a house.
You Have A Down Payment Saved
When you go to purchase your first home, it will come with a few upfront costs such as a down payment. The amount for the down payment will vary between mortgage types. Typically, a down payment can be anywhere between 5% and 20% of the home's purchase price.
Your Debts Are Paid Off
Before you apply for a mortgage, it is best to pay off as many outstanding debts as possible. If you have eliminated your credit card debt and paid off your car loans, you can be sure you'll have enough money to go towards your mortgage each month. The extra cash flow you will have once your debts are paid off can go towards other expenses incurred as a homeowner such as property taxes, repairs, homeowners' insurance, and maintenance fees.
No job is guaranteed and all of them can come with uncertainties. However, the longer you have held steady employment, the more you can count on that employment in the future. When you go to apply for a mortgage, the lender will want to see that you have kept a job for a specific amount of time before they will approve you.
Having a perfect credit score is not a requirement for securing a home loan. However, the higher your score is, the better your interest rate will be. Lenders of mortgages will look at many factors when determining to approve you or not. If your credit report shows you haven't missed a single payment in more than a year, you will have a better chance of being qualified.
Tired Of Renting
Renting and dealing with landlords can be tiring. You are essentially paying off someone else's mortgage for them. You are helping to fatten their bank account and finances rather than your own. If you don't plan to move in the next three to five years, you may be ready to buy your own home. Owning your own home means being able to do what you want. You can paint your walls, make upgrades and decorate as you see fit without having to get the "ok" from a landlord.
These are just some of the things to take into consideration when thinking about whether or not you are ready to buy your first home. It is not a decision anyone should take lightly. Before heading down the path to homeownership, create a workable budget and learn to stick with it.