Buying your first home can be exciting and overwhelming at the same time. After all, it’s a big step. Some people may decide to buy their first home based on a life event or others may want to start building equity and stop paying rent.
There are many advantages to owning a home. Following are signs that you may be ready for homeownership:
You’re financially prepared
Being financially prepared to buy a home doesn’t mean having the cash needed to purchase it without a loan. In fact, most people obtain mortgages to get the home they want. As of 2020, approximately 44 percent of U.S. consumers reportedly had a mortgage.
Aside from having enough money for your closing costs and down payment, you’ll want to be in a good place financially. Experts recommend having enough money saved up that can cover your bills for at least three to six months in case unexpected expenses pop up.
If you have a sufficient amount of money save, but not quite enough for a large down payment and/or closing costs, that’s not a dealbreaker. There are mortgage options, such as FHA, VA and USDA loans, that can allow you to minimize your upfront expenses.
You’ve responsibly set a budget
If you’ve been successful with balancing your monthly rent and other expenses with a solid budget plan in place, you’re likely ready for homeownership. Some people are initially apprehensive about taking on monthly mortgage payments, but you’ll likely be paying close to the same (or less) than what you’ve been used to paying for rent. The big difference between a mortgage and rent is that when you own, you’re also building equity in your home with each mortgage payment.
Responsible spending, budgeting, and saving is a significant indicator that you’ve got your finances in order and that you’re ready to take the next step towards homeownership.
You have job security
Job security is important when you’re about to purchase a home. It doesn’t necessarily have to mean feeling secure working at a specific organization or company, either: simply feeling secure in your industry and knowing it will be easy to always be employed puts you in the perfect position for purchasing a home.
Of course, there are never any guarantees and no matter how secure you feel your career is, you’ll always want to be prepared financially in case anything ever changes. You may have also received a promotion or accepted a new position at a different company that has completely changed your financial situation, and has made it possible now for you to purchase your dream home.
A new job can also influence your decision to purchase a home if it means relocating for your new job. Whether you have an upcoming move or you’re currently in corporate housing and looking for a home, this new chapter in your life can also be the perfect time for your first home purchase. If you’re moving regardless, purchasing a home is a much better investment than renting. This can be the best time to make that home purchase, especially if you know you’re staying in your new city for a long time.
Your credit has improved
Good credit is important when you’re buying a home. The higher your credit score the lower your mortgage rate. Generally, a credit score above 740 will enable you to obtain the lowest possible mortgage rate for your situation. And the lower the mortgage rate the more house you can afford. Most mortgage companies will lend to qualified borrowers with credit scores of 640 and above.
You don’t have plans to move anytime soon
It can be difficult to know what the future will bring. Ideally, you’ll want to buy a home when you know you don’t plan on moving for at least four to five years, but the longer, the better. However, even if there is a possibility that you’ll end up moving in the near future, you’re much more likely to profit from the sale of a home rather than to continue paying rent.
You have realistic expectations
You know what your budget is and you’re sticking to it, and you have realistic expectations of how far that budget can go. It doesn’t necessarily mean settling for a home that you don’t like, but it’s a good idea to stick within your budget when purchasing a new home. You can increase the value of your home by making renovations such as painting, adding a patio or deck and furnishing the basement.
You’ve been timely with your bills
If there haven’t been any issues when it comes to paying your bills, it may be a sign that you’re ready to buy a home. Before taking the plunge, it’s important that you know you’ll be able to make your mortgage payment every month.
You know the commitment that’s involved
A lot of time and money goes into being a homeowner, and you’ll know it’s the right time to buy a home when you’re both financially and mentally prepared. Unlike renting, you’ll be responsible for keeping up with the maintenance inside and outside of your home—more so if you’re purchasing a home that is not part of a homeowner’s association (HOA).
Take the first step by applying for a mortgage
In the end, most people are happy with the purchase of their home and never look back. The only thing you might regret is not making the decision sooner, so what are you waiting for? The first step is getting pre-approved for your mortgage. Filo Mortgage can provide you with a pre-approval letter. Filo Mortgage also provides low rates with no points, helping you minimize your closing costs.