Thinking About Buying Your First House? 5 Signs You May Be Ready
You can’t wait to buy your first home. You’ve been scrimping, saving, and counting down the days until you’re ready to move into your first place. But how do you really know if you’re ready? You need to make sure you’re both emotionally and financially prepared for the responsibility that comes with homeownership. To help you figure out if it’s the right time for you, look for these signs before becoming a homeowner.
1. You genuinely want it.
According to Yahoo! Finance, make sure you’re pursuing owning a home because you want the freedom, opportunities and possibilities that come with it – all three are great, but also bring more responsibility. While this emotional component may seem like an easy one to figure out, it’s often harder than it sounds. The idea of owning a home is great, but renting is easier in many ways. With renting, a lot less responsibility falls on you to maintain and take care of the place.
2. You’re planning to stay.
Plan on staying in your new home for a minimum of five to seven years, according to a Bankrate article. There are several expenses that come with homeownership, such as the down payment, mortgage-related fees, and home maintenance and repair expenses, meaning short-term homeownership is rarely a smart financial option. If you turn around and sell a house after only being there for three years, you’re not going to break even. Make sure you have a secure employment situation and are satisfied with staying in one place for a while before making the leap to buy.
3. You’re pre-approved.
Most likely, you’re going to need financing in order to purchase a home. Before you start your home search, sit down and speak with a mortgage professional. “A good realtor will ask you what your criteria are and set up a search through the MLS for you, but a good realtor is also going to say, ‘The next step is for you to contact a mortgage professional and make sure you’re preapproved,’” Jay Dacey, a mortgage broker, said to Bankrate.
4. You’ve got a sizable down payment.
Typically, you should anticipate needing a down payment worth 20 percent of the home price. For example, if you’re purchasing a $250,000 home, you’ll need $50,000 upfront. That money down is just the beginning too, writes Kiplinger. Factor in closing costs, which can be from 3 to 6 percent of the purchase price, property taxes, initial repairs, moving expenses and decorating costs. While you’re at it, make sure you’ve still got some cash left over for an emergency fund. Try to put yourself in a spot where you have enough money to cover three to six months of your living expenses – should something happen to disrupt your steady income.
5. Be realistic.
There’s a lot that goes into owning a home. You are completely responsible for it – a drastic change if you’re used to a landlord taking care of maintenance stuff. If something breaks, it’s now up to you to either fix it or pay sometime else to fix it. Kiplinger recommends asking yourself these questions. Will you have the time, energy, or desire to maintain the property? How about the money for all those little extras, such as buying your own lawn mower and hiring the occasional plumber? Just make sure you’re truly good with the added costs and responsibility before diving in.