Buying a home is a major decision, and you want to make sure you are ready before diving right in. Here are eight signs that you’re ready to make the switch from renter to homeowner.
- You’re tired of rising rent prices.
- Increasing rent rates makes formulating a budget extremely difficult, and even harder to save for other financial goals
- You want to be building equity for the future, not pouring money into a bad investment month after month.
- Your credit score has improved.
- Improving your credit score will help you qualify for a mortgage
- You won’t require as large of a down payment
- The better the score the better the interest rate and loan terms in general
- You’re good at managing debt.
- Keep in mind your debt-to-income ratio: add up all of your monthly expenses and debts and divide by your gross monthly income
- Most lenders require a ratio of no more than 43%
- Some conventional loans allow up to 50%
- You have enough set aside for the extra costs of owning a home
- Make sure you are thinking about emergency funds for unexpected expenses
- Budget property taxes and routine maintenance costs
- You can afford the down payment and closing costs.
- Most conventional loans require a 5% down payment
- Some FHA loans, mortgages insured by the Federal Housing Administration, require only 3.5% down
- Closing costs could be another 2-7% of the property’s sale price, but this can sometimes be negotiable
- Search for grants and other loan programs, or better yet contact us to find a loan officer to find what will work best for you
- You’re ready to settle down in one place.
- With all of the upfront costs, you want to make sure you will be happy where you are settled
- Having job security is key, as you don’t anticipate moving in the next few years.
- You’re going through a major life change.
- Getting married, having a growing family, or getting a new job make for common incentives to prospective homeowners
- You know what you want.
- Is there a specific neighborhood or school district that you want to live in?
- Think about the different types of homes: houses, townhouses, condos, etc.
Ready to leave renting behind?
Contact us to find out what’s next! Call Michael Olear at 418-9959 any time for a free consult or assistance with real estate related questions.