Buying a home is one of the biggest decisions you’ll make in your life. In order to make the best decision possible, you need to make sure you’re ready to do so financially and emotionally. Here are some signs that you’re ready for homeownership:
You Have a Good Credit Score.
If you have been working to establish a credit score for several years and have a “good” or “excellent” credit rating, this is a sign that you’re ready for homeownership. Lenders will be more likely to give you a lower interest rate if your credit score is higher, because it shows that you are financially responsible enough to keep up-to-date with mortgage payments.
You Have a Large Amount of Money Saved Up For a Down Payment.
If you put down less than 20% on a home, you will have to pay private mortgage insurance for the lifetime of the loan. Sometimes, private mortgage insurance can represent an extra cost of hundreds of dollars per month. If you save up at least a 20% down payment, you’ll have a lower loan rate and you’ll own that much more equity in your home, which will make it easier for you down the road.
You Can Commit To Living in One Area For at Least Five Years.
Every time you purchase a home, you incur costs known as “closing costs.” Closing costs are the costs associated with buying a home that pay for realtor fees, lender fees, and inspection fees. Financially, it’s not worth it to buy a home if you’re going to stay in it for less than two years because you’ll have to pay closing costs every time you purchase a new home. If you can commit to living in one area for at least five years, you’re in good shape to buy a home.
You or Your Spouse Have Held a Steady Job for the Last Two Years.
The economy is always changing, and most lenders now require that you or your spouse have held a steady job for the last two years. This is also a good idea because it ensures that you or your spouse would be able to support the family’s mortgage payments on a regular basis. If you’ve held a steady job for at least two years, you most likely will have some emergency cash reserves saved, and you’ll be financially ready to make mortgage payments every month.
You’re Emotionally Prepared to Own a Home.
Homeownership is no easy feat because you’re completely responsible for everything. If your basement floods or your roofs leak, you’re responsible for fixing them. You need to be emotionally prepared with the fact that the home is yours, and you’re completely responsible for its well-being.
If you display all of these signs, it’s likely that you’re ready for homeownership. Get ready to start an incredible journey of looking for the house that will eventually become your home.