If you’re reading this, then I’m sure that you’ve heard all about the benefits of becoming a homeowner. From diversifying your investment portfolio and setting your financial future up for success to having a place that you can truly personalize and make your own, buying a home is something that many people look forward to.
But how do you know if you’re actually ready to buy a home? Answer these four questions, and you’ll have a pretty good idea.
1. Do I have a steady job and reliable income? You need to be able to pay your mortgage every month without fail, so having a good job is key to buying a house. Mortgage lenders also like to see at least 2 years of steady job history. If you answer no to this, then keep on working and save up more for your down payment in the meantime.
2. Do I have enough money saved for a down payment AND closing costs? Your down payment (the “seed” money that goes towards your mortgage) is a big cost that you need to save for in advance. But you’ll also need to save money for closing costs, which can run anywhere from 3-5% of the purchase price of the home. These costs include title searches, appraisal, inspections, and lender fees. Don’t get surprised by these closing costs, and make sure you have enough saved!
3. Is my credit history reasonably strong? Your credit score can make or break your mortgage payment and how much home you can afford. A better credit score will help you qualify for a lower interest rate, while a worse credit score will make your interest rate higher–and also increase the chances that you might not even qualify for a mortgage. Make sure your credit is in a good spot before even thinking about buying a home.
4. Do I plan to stay in my home for at least a few years? To make buying a home worth your while, you need to plan to stay in it for at least a few years and preferably 5-10. This will give your home time to appreciate in value so you can make a profit when you sell!
If you’ve answered yes to these four questions, then you’re ready to become a homeowner! If you answered some questions with no, that’s totally fine too because you can turn those into “YES!” with a little bit of time and planning.
