So you’re tired of the rent race. You’re sick of throwing money into the proverbial hole, and you want to start paying your own mortgage — not your landlord’s.
But are you really ready?
You see, there’s more to owning a home than just making a mortgage payment. Buying a house means constant repairs and maintenance. It means being willing to put money, work, and effort into your property, and it also requires a serious financial investment — one that goes beyond just down payments and closing costs.
Are you considering buying a house? Here are six questions to ask yourself first:
1. Is your income consistent?
Paying your mortgage on time is crucial if you want to remain in your home. In many cases, a lender can begin the foreclosure process after just one or two missed payments, and by that point, settling up your overdue balance can be all but impossible.
Before purchasing a property, make sure you have reliable, consistent income entering your household. If you just had a job change or are unsure about how much income you’ll have in the near future (or when you’ll get paid), you might want to wait until the dust settles to purchase a property.
2. How’s your credit?
Your credit (think credit score and credit history) are going to play a big role in your ability to buy a house. Good credit will make it easier and might even qualify you for a lower down payment. Not-so-good credit? Well, that will make home buying harder — and probably more expensive.
If your credit isn’t great, you might want to take some time to improve it before purchasing a home. Not only will better credit make qualifying for a mortgage loan easier, but it should also probably earn you a lower interest rate — and that could mean thousands in savings over the course of your time in the home.
3. Do you have the time to care for the property?
A house can offer a serious financial pay-off years down the line, but only if you take care of the property. That means keeping the yard trimmed, cleaning the home consistently, and doing regular maintenance on it — things like changing the A/C filters, spraying for pests, and repairing issues as they crop up.
Unless you’re going to pay a pro to do all these things (which could cost a pretty penny), you should expect to devote at least a few hours a week to general household upkeep and maintenance. If you’re at a busy point in life or just don’t want to put in the work, renting might be the better option for the time being.
4. Are you planning on staying put for a while?
A house is a big investment. It’s not a purchase you make lightly, and it’s certainly not a temporary decision. If you’re buying a house, you should plan to be in the area at least a few more years. That means staying in the same city, keeping your same job (or at least a similar one), and staying on the same general path for 3 to 5 years at least.
If you’re not sure where you want to be in the near-term or you’re considering a big career or life change, you might want to think about putting off that home purchase until you’re ready to put down roots somewhere.
5. Have you saved up a rainy day fund?
Having cash for your down payment and closing costs isn’t enough to be a homeowner. If you really want to safeguard your household finances (not to mention your investment in the home), then having a decent rainy day fund saved up is critical.
With a house, you never know when an issue will arise — when the fridge will break down or the garbage disposal will clog up. And when it does, you’ll need funds to address the problem and make it right. You may also consider purchasing a home warranty to help offset any future repair costs, at least for the first year or so.
6. Do you know what you want (and need) in a home?
You’re going to stay in that house for years — maybe even decades — so you’ll need to choose a property that fits not just your needs now, but your entire household’s needs years down the line. Do you know what those are? How many kids you’ll have and what schools you’ll want them to go to? The number of bedrooms you’ll need or the size yard your pup will require?
Being able to accurately estimate your family’s future wants and needs is crucial if you’re going to buy a house.
Are You Ready to Buy a Home?
Not sure if you’re ready to buy a home yet? Just want advice on how to make it happen? Get in touch with Embrace Home Loans today. We’re here to help guide the way.