Let’s say you can afford to buy a house, and you’ve already weighed the pros and cons pros and cons of buying one. It’s one thing to decide that buying is a good choice, but another thing to determine if you are actually ready to do it.
Before we start off, it’s important to know that buying a house goes beyond the desire to actually have one. It takes commitment and a certain kind of readiness, not just physically or financially, but emotionally as well.
Signs that you’re ready to buy a house
So how do you know if you’re ready? Here are some signs that will tell you that you’re ready to buy your first home:
- You’re planning to settle down. Buying a house entails cashing out a substantial amount of money. This includes the amount you need to pay for downpayment, mortgage-related fees and costs of moving – among other things. When you factor all of these things in, short-term home ownership doesn’t really make sense, because you will only end up losing money. Before buying a home, you should be able to see yourself living in it for a minimum of five years, at least. The longer you plan to stay, the better. So if you’re seeing yourself staying in one place for a time then house hunting may already be a good idea.
- You have enough savings. If you need to borrow money for downpayment for a house, then you’re most likely not financially ready for one. However, I’m not just talking about having enough savings for a deposit. In the course of buying and paying for a home, you will also be incurring all sorts of unexpected costs. A few things will break down and will require repairs, you may (God, forbid) fall ill or lose your job. If you’re planning to start a family, you’ll also need to factor in having kids and raising them into the picture. These things may mess up the budget that you have set for yourself right now, and may even cause you to miss some mortgage payments. Having enough money in reserve – at least six months worth – allows you to manage changes that may come into your life unexpectedly.
- You have an excellent credit score. Whether you’re buying or renting a home, having excellent credit is very important. Good credit will help you get lower mortgage and monthly rates and having bad credit may not even get you approved at all. This leads us to #4…
- You’ve had yourself pre-approved. Not everyone can afford to buy a house without a mortgage. Most people need financing to buy a home with the current prices today. Because of that, many realtors only take buyers seriously when they’ve already talked to a mortgage professional and have had themselves pre-approved. Doing so allows you to find out if you can actually get approved, and how much you can spend for on a house. This also puts you in a stronger position when you eventually make an offer on a house that you love.
- You’re ready to be a landlord. Just because you can afford to buy a house doesn’t mean you should right away. Owning a house requires certain responsibilities, some of which you never have to think about when renting. This includes becoming your own landlord. Being one means having to take care of maintenance and upkeep of the property, which require time, energy and desire. You also have to decide if you are ready for this sort of lifestyle change, unless you decide to spend extra and hire someone else when a specific need arises.
Owning a home can be a great investment, but only if you’re ready. If you feel that the timing and circumstances are right, go ahead and take the leap. If you’re still not sure about whether you’re ready to buy a home, go ahead and shoot me an email at [email protected] and I’d be happy to help you make that decision.