Buying your first home is a very exciting time. It can give you the opportunity to take a house you like and turn it into a place you really love. With that in mind, though, it’s important to determine if you’re really ready to buy your first home. If you aren’t, you could end up overpaying, getting something you’re not happy with, or maybe not even getting approved for a mortgage because your credit or finances are problematic. Naturally, those are the kinds of things you really want to avoid, and you can avoid them more easily by asking yourself these five important questions.
1). How long have you been renting?
If you’ve been a long-time renter, owning a house is going to be very different for you. You’ll have some freedoms you simply can’t get when you rent, but you’ll also have costs that you didn’t have before. It’s not just about maintenance, either. You’ll have taxes and insurance that you didn’t pay before. Renters don’t need to worry about paying any kind of property tax, and the renters insurance that covered your belongings is significantly less than the homeowners insurance you’ll be asked to pay. There may also be HOA fees, levies, and special assessments to consider, so make sure you do your homework before you choose a house to buy. You want to get the right location, and understand everything that will change when you move from renting to owning.
2). Do you have a good down payment?
Spending money on a house can be stressful, but it’s easier if you have a good down payment. When you buy a house, make sure you’re financially ready to own one. Having a good down payment of 20% means you won’t have to pay PMI (private mortgage insurance), which means your mortgage payment will be less. You can also have some equity in your home right from the start, putting you in a better financial position. Homes are investments, and you want to make sure you spend your money wisely. If you have a good down payment and buy a house that costs a bit less than you can actually afford, you’ll have a lot more peace of mind about your decision to own instead of continuing to rent.
3). What does your credit look like?
You don’t need perfect credit to buy a home, but you do need good credit. People who have a lot of late payments and other problems with money management aren’t good risks for banks, because they struggle to pay their bills on time. If you’ve had those kinds of problems in the past, you need to make sure everything you’re doing now is good. The longer your history of on-time payments, the higher your credit score will rise. You should also try to pay off as much debt as possible, and correct any mistakes you find on your credit report. By doing that, you’ll have a better score, and lenders will see you as a lower risk. That makes you more likely to get a mortgage, so you can buy the house you want.
4). Is your employment stable?
b employment matters. You don’t have to work at the same place for decades in order to get a mortgage, but you do need a good work history that shows you make enough money for the mortgage you want to get. If you don’t have stable employment, your employer may want you to move to another location, or you just recently changed jobs, now might not be a good time to buy your first home. When you’ve worked in the same industry for a long time and have recently changed employers that’s not as much of a problem, but it would be a good idea to discuss it with your lender before you commit yourself too bly to your house hunt.
Also, keep in mind that self-employed people can have a harder time getting a mortgage. Even if you’re making good money, you’ll need at least two years of tax returns to be considered for a mortgage so you can buy your first home. You also want to remember that all of those expenses you write off to lower your income tax also lowers your income. Those write-offs can make it look like you don’t make enough to qualify for the house you want, even if you actually do. Self-employed people have to balance saving money on taxes with showing enough income to be able to qualify for a home.
5). Can you make a commitment to maintenance?
One thing home buyers might neglect to focus on is the maintenance they will need to do on their home. The purchase of a house means that when something breaks or needs repair or replacement, you’ll have to do it yourself or pay someone to do it. You also can’t just call the maintenance man for free when the furnace filter needs changed or the refrigerator is making an odd noise. Long-time renters can be great homeowners because they want control of their own space, but it’s important that you really understand the extra responsibility that you’re taking on, as well. That can help you feel good about buying your own home, and reduce any anxiety you feel. If you’re ready to buy your own home, you’ll be prepared for everything that you’ll need to do to get there.
2 Point Highlight
Spending money on a house can be stressful, but it’s easier if you have a good down payment.
One thing homebuyers might neglect to focus on is the maintenance they will need to do on their home.
