If you’ve been dreaming about owning a home for a while and you’re wondering if the time has finally come, there are some things you may want to consider first before making any final decisions. Because a home is likely the most expensive purchase you’ll ever make, you want to make sure the timing is right.
The following are some signs that you may be ready to buy a home:
You pay all of your bills on time
If you have any issues paying your bills, you may want to put off homeownership. If you’re late with mortgage payments or paying your property taxes, for instance, then you risk losing your home. A loss like this can be absolutely devastating, so until you’ve made a habit out of paying all of your bills on time, you may want to hold off on homeownership.
You’re ready to settle down
Buy a home in an area that you see yourself living in for a few years, at the very least. If you’re unsure of your plans and can’t say without a doubt that you don’t plan on leaving your current city anytime soon, you may want to wait on buying a home. Of course, it’s difficult to know what the future will hold and if you’ll end up relocating much sooner than anticipated. But if there are any doubts from the very beginning, you may want to wait until you’re ready to settle down in a specific town or city.
You’re ready financially
This is a big one: you may be emotionally ready to buy a home, but are you ready financially? Homes cost a lot of money, and even if you plan on financing your purchase, most mortgages require that borrowers put down at least 10 percent. There are also closing costs to budget for, which can be as much as 5 percent of the home’s sale price. On top of actually buying your home, you also have to be prepared financially for all the ongoing costs that come with homeownership. This includes things like property taxes, homeowners insurance, renovations and repairs, and so on. If you have any doubts about being ready financially, you may want to wait on buying a home.
You’ve responsibly set a budget
Sometimes, first-time homebuyers end up losing their homes to foreclosure because they underestimated just how much it does cost to own a home. Even if you’re confident that you’re financially prepared to buy a home, it’s also important to be sensible about how much house you can truly afford. Even if your budget can support a specific dollar amount when it comes to your mortgage, taxes, and other household expenses, you don’t necessarily need to push that amount to the limit. Instead, give yourself some wiggle room and think along the lines of a starter home. In other words, just because you can afford a mortgage that increases your payments by a few hundred dollars more each month, doesn’t mean you need to set your housing budget that high, especially if it won’t leave you any money to contribute to savings. If you can responsibly set a housing budget that leaves you with enough money each month to pay off debts and to save, you may be ready for homeownership.