How To Know If You Are Ready to Buy a Home

Are you currently debating whether or not to buy a home? If so, there’s most likely a lot on your mind. You’ve got to consider your finances, today’s mortgage rates and home prices, the limited supply of homes for sale, and more. Plus, you’re trying to figure out how all of those things will impact the choice you’ll ultimately make.

While the current state of the housing market is a big factor in your decision, your own life and finances may be even more important. Take into consideration this quote from NerdWallet:

“Housing market trends give important context. But whether this is a good time to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.

So while trying to time the market is important, focusing on what you can control is more important. Here are a few questions that can give you some clarity on whether or not you’re ready to make your move.

1. Do You Have a Stable Job?

One of the most important factors is how stable you feel your job is. Buying a home will most likely be the biggest purchase of your life up to this point, and you’re going to be signing a loan promising that you’ll pay that loan back over the pre-determined amount of time. This can be a big responsibility and financial obligation. Knowing that you have a reliable job and income can help you pay your bills and put your mind at ease. NerdWallet suggests that:

“A mortgage is a big commitment . . . Wait until your employment is stable before thinking about buying a house.”

2. Do You Know What You Can Afford?

While knowing your own financial situation is a great starting point, you’ll need to talk with a certified and trusted lender to determine how much you’ll need to save and what you can expect your monthly expenses to be. A lender will also be able to explain the pre-approval process and what you can borrow, the current mortgage rates, anticipated closing costs, what percent of the purchase you’ll need for the down payment, and more.

While this may seem overwhelming, the best part is that you may be closer to your goal than you realize. You don’t necessarily need to put down 20%, unless it is specified by your lender or loan. Down Payment Resource explains that:

“A 20% down payment on a home is great, but... Many mortgages require no more than 3% to 5% of the purchase price as a down payment. Plus, there are loans and grants that may help cover these costs. Search for down payment assistance in your area, and discuss your results with your mortgage lender.

3. How Long Do You Plan to Live There?

Another important aspect at play is how long you plan on staying in your home. It takes time to build equity in your home through paying your monthly mortgage payments and your home price appreciation. If you are only planning on staying in your home for a year or two, then buying may not be the best option. A recent article from CNET explains that:

Buying a home is a good idea if you’re planning to stay put for at least three years. Home values typically increase between 2% and 5% annually, so you could end up paying more in closing costs than you’d earn in proceeds if you sell after only a year or two.”

So, really think about what your future may hold. If you plan to move to a new city due to an upcoming promotion you are working toward, or if you are planning on getting married and/or having children, or if you anticipate that you’ll need take care of aging family members, those are all important factors to consider.

However, above all else, the most important question to ask is: do you have a team of real estate professionals in place? If not, finding a trusted local agent and lender is a good first step. Once you have your team in place, you can wait until you are ready to dive into homeownership.

Your Team of Professionals

Whether or not you have a team of real estate professionals already, Dianne Anderson is a great addition to any team. Contact Dianne today to start a conversation.

Post a Comment