Ready to Buy Your First Home? 8 Ways to Know You’re the Time Is Right
Buying your very first home is definitely an exciting adventure. If you’re considering purchasing your first home, you’ve probably thought about your list of “must-haves” such as a plush master bedroom, two bathrooms, and maybe even space for a man-cave or your library. Unfortunately, there’s more to buying a home than having a list of specifications in mind. You really need to be ready and put a lot of thought into what you want out of your home.
Sadly, many people fail to give great consideration to their financial situation and whether they’re really ready to buy a home. They don’t understand or acknowledge what they’re jumping into before it’s too late, suffering from significant financial harm as a consequence.
How do you know if you’re ready to buy a house? You might be ready if the following things are true of yourself and your financial situation right now:
You’re a Budgeting Wizard – If you know where your money is going every month and how you’re getting it, able to pay off bills regularly without going into debt, and are able to save a bit of your money back into the savings every month, then you are a budgeting pro. Having a good handle on your finances is a huge step to being a successful and responsible homeowner.
You’re Not Controlled By Debt – Mortgage, believe it or not, is essentially a debt. Buying a home is, indeed, a great investment, but it’s a large obligation that you must pay off. Before you enter into more debt, make sure that you have good control of any current debt you have. Take down high-interest debt first and work from there. Lower-interest debts like student loans and car payments can usually be managed alongside a mortgage payment, so if you’ve worked the payment of these debts into your monthly budget and you’re paying them off at a reasonable rate, you might be ready to buy that home you want.
You’re Ready to Say Farewell to the Landlord – Having a landlord can be pretty great. Did something break? Call the landlord – not only will he fix it, but he will also foot the bill to boot! When you have your own home, though, you have to be ready to repair anything that breaks and pay for it yourself. If homeownership and freedom outweigh needing to repair anything that breaks, then you could be ready for shouldering the responsibility of owning a home.
You Have a Robust Emergency Fund – Okay, so you don’t have to have hundreds of thousands of dollars saved in order to buy a home, but you will need enough to help you pay for any home emergencies that happen. It will also help you make sure that the bills are paid in time in case you get sick, hurt, lose your job, or run into any other unexpected events.
You Have a Steady, Reliable Income – Before you take on a mortgage, you need to make sure that you have a secure job that provides steady income. You must be confident that you’ll be able to afford your mortgage payment a year from now, 10 years from now, and longer down the road. You should also have at least one to two years of employment history at your current job under your belt. If you have any doubts about your financial situation, wait to buy a home.
Your Credit Score Is Decent – Most mortgage companies have a minimum credit requirement to obtain a mortgage. Getting a mortgage with a poor credit score could mean that you would have a higher interest rate and that you’ll have to pay more over the life of your loan. Having a better credit score usually means that you pay less to own your home. Before becoming a homeowner, request a free copy of your credit score and see if you need to take steps to improve your score.
You’ve Saved for a Down Payment – In almost every scenario, you will need a down payment when you buy a home. The larger your down payment is, the less interest you’ll end up paying on the loan. If you’re able to save up quite a bit of money – thousands of dollars – in order to provide a decent down payment, you should be in a good financial place to make a home purchase.
You’re Ready to Stay In One Place – Want to be a globetrotter? Buying a home might not be in the cards for you right now. It just doesn’t make much financial sense to purchase a home and not be around to pay for it, especially if you’re not ready to settle down. If you plan on and are willing to live in the same place for at least 5 years, then buying a home shouldn’t be a problem.
Buying a home is a big commitment and is also the biggest financial decision you’ll ever make, so make sure that you’re ready! Remember, being responsible and protecting your home with proper home insurance is also part of the package. If you’re ready to take that step and get an insurance policy or if you’d like to talk to a professional about it, just call Madison Mutual at 1-800-766-MMIC!