As with many big decisions in life, from choosing when or if to have children to decide if you’re ready to purchase a house, one main question that seems to always pop up is simply if you’re ready? You’ll hear people say time and time again that there is never a “right” time to plan for big moves in life, however, when it comes to purchasing real estate this couldn’t be further from the truth.
There are a lot of factors that go into purchasing a home and being one of them, if not the most expensive purchases you’ll make in your lifetime, it is easy to see why so many consumers want to make sure they are ready before they begin their house-hunting journey. Many Real Estate Professionals recommend that you investigate these 5 things before making the final decision to either start or delay your house hunting journey.
First and foremost, are you comfortable making a monthly mortgage payment? If you’ve been living in a rental and are used to making monthly rent payments, and have done so on time, then you may be ready for the financial responsibility that you will assume by purchasing a home.
Having a healthy savings account is key when purchasing real estate and too often you’ll see buyers scrounging every penny for their down payment, and while this will allow them to purchase the home, should any issues or additional fees arise, you’ll be stuck in a financial hardship that could damage your credit and cause problems with your mortgage lender.
Debt to Income
To be approved for a home loan, you will have to provide multiple documents showing your current debts and monthly payments. This is to help ensure that you can afford the mortgage on the house even with your other debts and payments taken into consideration. While a lender will indeed give you a final approval or denial based on your current debt to income ratios. It is important to understand that sticking to your personal budget is more important, so even if approved for a higher sum, always stay within the budget that you’re comfortable with.
Much like the above point, you will also need to have a decent credit score to obtain financing for a home loan through a mortgage lender. While some loan types will allow you to have lower scores than others, you will normally be required to pay a higher interest rate due to the lower score. Ensuring you have a high score will help open better interest rates and terms for your new home loan.
Understand the Risks
Unlike rentals, when purchasing a home, you are solely responsible for any repairs and damages that may occur. Because of this, it is important that you understand by purchasing a house you are either physically able to make all repairs that may be needed yourself, or financially stable enough to hire help if needed.
Buying a home is a huge commitment, one that shouldn’t be taken lightly. While a rewarding experience that can help you invest in your future, it is vital that you consider all the above points and look at all of your options in-depth prior to beginning your home buying journey. Not everyone is financially or emotionally prepared to buy a house or jump into the real estate market. The last thing you want is to realize 6 months down the line you’re stuck with a mortgage payment and a major responsibility. As with all Real Estate transactions, working alongside a reputable and knowledgeable agent is your biggest key to success.