There’s nothing as thrilling and nerve-wracking as buying your first home. This is a huge investment in your future that gives you the chance to create a space for yourself. Unfortunately, there’s no clear life change that makes it obvious that it’s time to buy a house.
If you’re lost and unsure where to start: here’s how to know if you’re ready.
What’s Your Work History?
Have you worked for the same company for several years? If not, has your income been steady for the last five to ten years? Many lenders look at your work history as a sign of why they should or shouldn’t invest in you. If your work history is spotty, or you’ve just started a well-paying job within the last year, they might not think you’re a good investment. Take the time to build up this work history.
What’s Your Credit Score?
Our credit scores matter a lot more than people may realize. Although 640 is considered a ‘good’ score: any score below 700 may have trouble finding a good rate for a loan. Take the time to build up your credit by paying off debt, avoiding opening new accounts, and trying to keep your current accounts in good standing.
How Much Do You Make In A Year?
Do you make enough money to buy a home? In some areas, homes are worth millions, while that same property may only be worth a hundred thousand in others. Consider what the market in your area looks like and whether you’d be able to handle a monthly payment on them or not. Although you can’t magically double your income working for the same company, if you decide to buy a house with your partner and live together, you could make it more affordable.
Can You Afford The Homes In Your Area?
How much are the homes in your area worth? If you buy a $200,000 home, you could be looking at house payments of $950 a month. If that’s more than a third of your income: this isn’t feasible. You can try to save up to make a large down payment, which would lower your monthly cost, but besides moving to a less expensive area, there’s no other way to find more affordable housing.
Are You Ready For The Work Required?
Taking care of a home requires a lot of work! If you catch yourself wondering, “Should I rent or buy a house?” -the biggest difference will be the amount of work you have to put into it. Owning a home means fixing any issues with it, maintaining the lawn, taking care of any problems like leaking roofs or broken dishwashers, and dealing with the taxes and HOA fees that come with it. Renting an apartment allows you to avoid all of this.
Although there’s no clear way for everyone to tell what decision is right for them: take your time and be careful with your answer. Although putting off buying a home for a couple of years may seem like a pain now, waiting until it’s more affordable for you can make it perfect.