5 Signs You’re Ready to Buy a House
Switching from living in a rental to owning your own place is an important stage in many people’s lives. In fact, some people consider this to be their entrance into the world of financial security and personal freedom. However, owning your own home is typically a substantial financial responsibility. Hence, it is a decision one should not reach prematurely.
As much as you might be eager to, for example, downsize after the kids leave the house and search for a new, smaller home where you can settle for good, take a few moments to consider the following and decide if you are ready to buy a home. For this reason, we will talk about five signs you're ready to buy a house.
1. You no longer want to throw away money on rent
Why pay your rent every month when you can invest it into a property of your own? If you are fed up with living on somebody else's terms (and somebody else's property), this means it is high time you ditched monthly rental payments.
Therefore, it makes sense to divert the rent money toward monthly mortgage payments instead. In this way, you are building equity, which is one of the most significant advantages of owning your own home. Another benefit of owning the house you live in is the possibility to take out a HELOC or a home equity line of credit, which means you can borrow the money you have invested in your home if you find yourself in a difficult financial situation.
2. If you can take care of the house, you are ready to buy a house
Buying a house is no small feat. However, the spending may not stop there. In some cases, home renovation and maintenance costs can become overwhelming, to the point where you might regret buying the house in the first place.
- In light of this, you need to ascertain if you are financially prepared to pay the bills and maintain the house you want to buy. What’s more, this should be one of the questions you should ask your real estate agent before you start negotiating with the home seller.
So, try to assess if you can take care of every aspect of the property's upkeep. Anything from lightbulbs to sewage maintenance should fare into the equation. You may even want to research contractor and handyman fees that are typical of the area you intend to move to. This kind of realistic way of thinking will allow you to determine if you are financially capable of owning your own home.
3. Consider the down payment and closing costs
You have been frugal with your spending to get a home loan. In most cases, the home sellers will ask for a cash down payment to finalize the sale of the property.
The down payment amounts to a certain portion of the home’s value. So, you may have to put down somewhere between 5% and 20% of the property's total price. It means you will have to amass the necessary amount of money before you consider purchasing a property of your own.
Unfortunately, the expenses may not end here. Be sure to take into account possible closing costs into your budgetary considerations. This kind of precaution will allow homebuyers haunted by their financial past to take control of their home buying process and anticipate all financial exigencies that come their way during the process.
These closing costs may include payments for the real estate agent’s fees, home inspection, or title-related fees. Hence, be sure to assess whether your current financial situation allows you to come to grips with all cash payments that may come your way.
4. You plan to live in one place for a longer period of time
As much as moving from city to city can be exciting, most people like to have a safe harbor to return to. Owning a house is not only a matter of proving your financial stability. It also allows you to feel like an actual resident of the given city or community - something renting can rarely provide.
Furthermore, you will no longer have to move from rental to rental whenever a landlord decides to increase the rent or terminate your lease. So, if you intend to move somewhere for a more extended time - a couple of years, or for good - it makes sense to buy your own home.
Most people buy a house when they decide they no longer want to move house.
Alt: a man giving a handshake to a real estate agent after a house purchase
Chances are, you will be exhilarated once your packing, labelling, and relocating days come to an end. And the end is nigh, which is a good thing! If you intend to relocate one last time to Georgia and settle in your new place hassle-free, be sure to hire responsible movers that specialize in residential relocations. In the long run, you will be grateful that you bought your own place in which you can arrange furniture, paint, and decorate any way you want.
5. You have a good credit score
A strong credit score is typically one of the preconditions for considering a house purchase. Without a good credit score, you may not be able to find a bank that is willing to grant a home loan. Also, note that banks usually give better interest rates to people who have good credit scores. In most cases, having a credit score above 600 will do.
However, you can work on improving your credit score if you feel you’re ready to buy a house. Be sure to pay all credit card minimums on time, or otherwise, to ask for a higher line of credit or work on improving the debt-to-credit ratio. In this way, you will improve your chances of getting a home loan and fulfilling your dream of owning a house you can call your own.
Image “exterior of house at dusk” by Erhard Pfeiffer via Pinterest.