Am I Ready to Buy a Home?
Owning a home might be part of the American dream, but not everyone is at the point in their lives when buying a house makes sense. Figuring out if you're ready to buy a home means taking a look at your financial situation and at your goals or expectations for the future. How busy the real estate market is in your area can also influence whether you buy a home now or decide to wait for a bit.
You're Ready to Settle Down
One of the arguments in favor of homeownership points out that buying is often cheaper than renting. Your monthly mortgage payment is likely to be lower than what you'd pay in rent for a similar property. But there are a number of costs associated with buying a home, such as closing costs, that can make it initially more expensive than renting. Even if buying seems like a great deal, you might not be ready to buy if you plan on leaving the area in just a few years. As a general rule of thumb, only think about purchasing a home if you plan on living in it for at least three to five years.
You Have Some Money Saved
Having enough money for the down payment on a home is important. It's typically recommended that you have at least 10 percent of the home's value to put down, if not 20 percent. Ideally, you'll have more than just the down payment saved up, as there are a few other upfront costs to think about, such as the closing costs and the cost of actually moving in the new home. You'll also want to have some money set aside for emergencies and home maintenance.
Your Credit is in Good Shape
The state of your credit plays a big role in determining the type of mortgage you can get or if you're even able to get a mortgage. It's usually a good idea to check out your credit about a year before you plan on buying a home. If there are any big errors on your credit report or other issues, such as a bill you forgot to pay, you'll have time to correct them and potentially improve your score before a lender takes a peek at your report and decides whether or not to pre-approve you for a mortgage.
The Market Isn't Bad
While you can control your credit and savings, some aspects of buying a home are beyond your control. One of those is the market in your area. If there's a lot of demand for houses in your area, and you have a limited budget, it might not be the right time to buy, even if you have enough in savings and excellent credit. But, if there are plenty of homes for sale and little demand, it might be the perfect time to buy, as long as you've got a plan for the next few years and have your finances in order.
If you're ready to buy or simply want to see what's out there, Jason Cowdin at the Cowdin Group can help. Contact him today to learn more about what's available and what you need to do to get ready to buy a home.
Blog Archive2016-02-26 10:35:24
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