Many first-time homebuyers spend months, if not years, debating whether they’re ready to buy a home. Any hesitance is understandable! Buying a home is a major financial commitment and there are a lot of factors to consider. One of the first things to consider is whether you want to buy a home and if you are ready.
This differentiation is important. Wanting to buy a house and actually being ready to buy are two different things. If you think homeownership is in the cards in the near future, here are some signs to look for.
You’re financially stable
There’s no way around it: owning a home is expensive. There’s the down payment, monthly mortgage payment, homeowner’s insurance, property taxes, closing costs, homeowner’s association fees (if applicable), and repairs. How do you know you’re financially ready to own a home? Here are some things to look for:
You have a good credit score. Your credit score is an important three-digit score that will determine the interest rate and other costs you’ll pay on a loan. Higher credit scores can help get you a more favorable interest rate, which can save you thousands of dollars over the life of your mortgage.
You have a solid savings and emergency fund. Responsible homebuyers make sure they have the additional cash flow to cover the additional homeownership costs (like the ones mentioned earlier). You want to make sure you’re in a place where an unexpected repair doesn’t cause financial distress.
You’ve been paying down your debt. Paying down debt gives you more cash to cover your home maintenance and other incidental costs (like a new couch). You don’t need to be completely debt-free but you should have a manageable debt load before adding a mortgage.
You’re ready to settle down
Flexibility is one of the key benefits of renting. It gives you the ability to try out different neighborhoods and cities to hone in on what you like. But if you’re feeling ready to settle down in a specific area for a significant amount of time, it could be time to become a homeowner.
Conventional wisdom says you should plan on living in your home for at least three to five years before considering selling. This gives your home time to appreciate and build enough equity to cover what you spent on the home purchase (typically agent fees and closing costs). If you sell before then, you risk not breaking even on your purchase.
You want more control over your living space
Homeowners get to enjoy a level of privacy and control most renters don’t have. You no longer have to worry about the landlord coming into your apartment, deal with noisy neighbors with shared walls, or deal with paying extra fees for pets. You’re also free to make updates to the home to fit your personal style preferences.
You’re ready for all the responsibilities
Homeownership is all about responsibility. In addition to the financial responsibilities (mortgage, taxes, insurance), you’re also on the hook for taking care of your large investment. All the regular upkeep and maintenance to keep your home in its best shape will be your responsibility. It’s helpful to know how to fix smaller issues and be prepared to pay a professional to deal with larger issues beyond your capabilities.
You know what you’re looking for and what you can afford
Buying a home is not an emotional decision; It’s important to know the type of home you’re looking for and how much you can afford. Mortgage calculators are a good way to estimate how much you can afford and see how your down payment amount can affect your monthly mortgage. Review your monthly expenses and income to dial in on how much you’re comfortable spending your home each month.
You don’t need to know every single detail for your new home but should have a general idea of what you’re looking for. Creating a list of your must-have features (e.g. location or neighborhood, number of bedrooms and bathrooms, and other important non-negotiable features you need in your home) will keep you focused during your home search.
Are you feeling more confident in your decision to buy a home? We’re ready to help! Visit us at SummerHillHomes.com to learn more about our communities, view virtual tours, and schedule a private tour and get ready to find your new home.