The dream of owning a home is almost synonymous with the American dream. But the decision to make it possible requires a lot more careful planning and scrutiny. While it might be driven by life circumstances such as a career move, marriage or childbirth, whether you are ready to take the leap is often determined by your financial affairs.
Before you hit the housing market, it would be wise to contemplate where you are, in fact, ready to invest in real estate soon.
1. You have Saved up Sufficient money for Down Payment
No surprises here; if you want to be a homeowner, having enough savings for a down payment would make the process a lot easier. A down payment is a portion of the purchase price you pay upfront. This usually comes out of your pocket and not as a part of the mortgage.
Depending on the lender, you would need to put up anywhere between 5 to 20% down payment to get a reasonable rate. It is indeed possible to offer low down payment; however, the downsides include higher PMI, monthly installments, and mortgage rates. If you have saved up enough money to cover both down payment and the closing costs, then you are in an excellent place to start thinking about buying a home.
2. You have Job security
This is a significant factor, both personally and financially. If you are happy with your job, then you are likely to stay at a location for the long term, which is a great time to invest in a property. Additionally, it also secures sufficient income in the future to keep up with the payments.
On the other hand, buying a home would imply that you are going to live in one place for a considerable amount of time. This might allow you to get settled in the job, start looking upon service reviews and establish relationships within your community.
3. You have a Good Credit Score
A good credit score could make a big difference in impressing lenders for easy mortgage approval. You will get better interest rates and might even have the possibility of lower down payment. In general, homebuyers should aim for a credit score of 600 or above to consider yourself ready.
If you have been keeping up with the credit payments on time, and have a good debt-to-credit ratio, then it shouldn’t be a problem to raise your score to meet the standards. Aim for the highest score you can, and a good credit score could make your mortgage more affordable.
4. You Want to Stop Renting
Being a good renter is a sign that you can meet the monthly payments. Whether to buy or continue renting would depend on several factors, such as location and rent rates. Regardless, with the rising rents, in the long term, buying might be the better choice in terms of finances.
Your monthly payments on a fixed-rate mortgage would remain the same over the years, whereas the rent would increase. Furthermore, the mortgage payments are going towards equity, unlike rent. If you have the choice, then you might want to consider which is better for you.
5. You Know What you Want
If you have ticked off all the above boxes, then the chances are, you also have a fair idea of what you are looking for. You know what your requirements are, where you want the house, and even how your future might look in the house. Now all you need to do is look for a reliable real estate agent through UpNest to find you the home of your dreams.
So, are you ready to set out for the most exciting journey of your life?