Whether you’ve been renting for years or you’re getting ready to embark on the next chapter of life, purchasing a home is a decision that requires a good bit of thought, research and careful contemplation. Becoming a homeowner is considered by many to be one of the largest financial commitments in a person’s life. Knowing when you are ready to buy can be tricky, but we’re here to help you decide if you’re ready to unlock the door to your first home.
Are your finances in order?
Before buying a home, think about your current financial status. How much debt do you have? Do you have auto loans, student loans or personal loans? If you do have debt, evaluate your debt to income ratio and how it will change if you purchase a home. For more help, the National Association of REALTORS® has shared top reasons for mortgage denial so that you can improve your odds of securing a home loan.
Do you have money saved for a down payment?
Knowing the percentage you need to put down for a home loan is another important factor to consider. In addition, you need to consider closing costs, insurance, taxes and money for repairs and furnishings. A lot of people do not consider these extra costs, and they can easily add up to thousands of dollars.
Can you afford the monthly payment?
Sure, you can afford a mortgage equivalent to your rent, but can you afford your monthly mortgage plus property taxes, insurance, homeowners association fees, city assessments, water, sewer, garbage and other utilities? Often times, these expenses are usually included in your rental costs. Before deciding if you are ready to buy a home, decide if your personal budget can handle these additional monthly expenses.
Can you fix your own problems?
Being a homeowner is not as simple as paying your bills each month. Homes require upkeep, and any home can encounter problems - a leaky roof, a broken appliance, etc. Will you have the ability to fix problems yourself or have the resources to pay others for repair services? Unlike renting, you will not be able to call the landlord to remedy your problems.
If you feel you meet all of these standards, you could be ready to purchase your own home. Talk to a Baldwin REALTOR® today to discuss next steps. If you do not, consider spending some time getting ready to take the next step by preparing your finances, building up your savings and increasing your credit score.