Becoming a homeowner is an exciting time in anyone’s life. At the same time, it can feel overwhelming and even a bit frightening to take that step. If you are trying to determine whether or not now is the time to buy a house, ask yourself these five questions to help decide if you are ready.
Am I Ready to Settle Down in This Area?
While there are many benefits to homeownership, it generally is not a financially sound idea to purchase a home if you will not be living in it for at least five years. Therefore, if there is a good chance that you will be moving within the next few years or if you are not feeling good about calling that particular area your home for the next several years to come, it might be better to simply rent until you know for sure.
Are My Finances Under Control?
Purchasing a home requires making a huge financial commitment. Therefore, you need to be sure your finances are in order before you begin the process of buying a home. Not only will this help to improve your chances of being approved for a loan, but it will also help to guarantee that you are better prepared to handle the added financial burden that homeownership brings. If you are struggling to pay your bills on a monthly basis, if you are buried in debt or if your source of income is unstable, it may be better to wait until your finances are in better condition before purchasing a home.
Do I Have a Down Payment Saved Up for a Home?
Unless you qualify for a special program that does not require a down payment, you will be expected to have at least a small amount of money saved to go toward a down payment on a home. Conventional home loans require a 20 percent down payment, but some programs will allow you to purchase a home with as little as 3.5 percent down. This means you would be expected to have $7,000 to put toward a down payment on a $200,000 loan.
Can I Afford the Payment and Upkeep?
As you crunch your figures and determine how much you can afford to pay toward a home, resist the temptation to stretch your dollars too far. In addition, keep in mind that you will have to pay more than just your mortgage loan repayment amount each month. You will also have to pay for insurance, property taxes and costs associated with repairs and maintenance. All of these costs can add up quickly, so be sure to leave some wiggle room in your monthly budget for these other expenses.
Am I Comfortable with Maintaining My Home?
As a renter, your landlord is responsible for completing maintenance and repairs on the property. Whether the landlord does the work himself or hires a professional, you are not required to handle the job. Before becoming a homeowner, you need to ask yourself if you are ready and willing to take on these tasks yourself. From mowing the lawn to repairing a leak, are you prepared to get your hands dirty or do you prefer leaving this up to someone else? If you don’t want to take care of these tasks yourself or if you are not prepared to hire someone to do them for you, it might be better for you to continue renting instead.