Buying a home can cause a lot of stress and anxiety. Buying a house an enormous investment and can change the course of your life forever. Not only is this a substantial financial decision, but it can impact you emotionally as well.
There are so many things to do before you; you are even ready to start looking. There is no specific age or milestone to determine if you are prepared for homeownership. So how do you know if you are ready to commit to buying a new home? Take a look at this brief first time home buyer guide to help you decide.
Do You Have Enough for the Down Payment?
Buying a house is expensive, but the highest upfront cost by far is the down payment. Depending on the type of mortgage you receive, it can be anywhere from 2-20% of the purchase price.
Here are some common mortgage rates:
- FHA Loans – 3.5% down payment
- Conventional Loans – 3% – 20% down payment
- 203k Loans – 3.5% down payment
- Jumbo Loans 15% – 30% down payment
In addition to the down payment, you need to consider closing costs, insurance, taxes, and funding for repairs and home furnishings. These costs are easy to neglect but can quickly eat into your bottom line.
How’s Your Credit Score?
You don’t necessarily have to have perfect credit to get approved for a mortgage these days, but it certainly helps. If you don’t currently have a score of over 640, your odds of getting approved are much smaller.
If you are looking at a score of over 580, you will qualify for an FHA loan that has a 3.5% down payment; however, lenders also look at more than just your credit score. If you have missed any payment in the past 12 months, you are unlikely to qualify.
Are you ready to settle in one place?
Unless you are planning to flip the house, it is essential to think of it as a long term investment. If your career is on track and you see yourself sticking around for a while, then you are in good shape. If you buy a home and sell it in only a few years, the increased value might not even cover the price you paid.
Most experts suggest staying in a new home for at least five years. If you can’t commit to that amount of time, maybe homeownership isn’t for you.
How are you with repairs?
When you forego the landlord, you should learn to fix problems yourself. Or pay for them.
If you can make repairs yourself, you will save a lot of money and keep your savings in the bank. Little surprises like a leaky faucet or a malfunctioning refrigerator are common. When you become a homeowner, you must be ready for these things, both mentally and financially.
Always keep in mind that the structure itself is a diminishing asset. Only the land will appreciate over time.
If you can check all these boxes, then homeownership may be in your future.
Do You Have Steady Employment?
If you are confident in your ability to pay the monthly payments on time, you should also consider your job security. If you have been at the same job at the same company for two or more years, that is a good sign that you have the stability to afford a mortgage. Your employment history will also make it easier to get approved for a loan if you can prove you have a steady income.
If you are confident in your ability to remain steadily employed, you might also be ready for homeownership
Are you tired of renting?
Renting a house or an apartment can be exhausting. Usually, you are paying someone else’s mortgage, draining your bank account, and not improving your social status. It is challenging to make any upgrades or stylistic changes. Maybe you are tired of wasting your money on a situation that doesn’t lead to ownership.
Buying your own home comes with a great sense of pride and accomplishment. You can make upgrades, plant a garden, and customize your style. If you are tired of renting, it might be time to look into owning a home.
If you are looking to buy Williamsburg, VA real estate, following these tips will ensure you are ready to become a homeowner. Being a homeowner is the dream for most Americans, but being a confident buyer is more important than ever. When you are ready to buy, you can buy with confidence and finally enjoy the house of your dreams.
You will now have a much clearer idea if you’re ready to buy a home or not. If you ever have questions, just give us a call or shoot us an email. We are happy to help you out!