Buying a house is a big step; not one to take lightly or haphazardly.
It’s important to have all of your ducks in a row and be prepared for the financial responsibility ahead. Before we show homes to any of our potential buyers we make sure that they are pre-approved for a home loan if they are financing the purchase and that they are emotionally ready for the responsibility of homeownership.
Yes, homeownership is amazing and definitely something to strive for, but if you’re simply not ready, it can be a burden financially and mentally. But that’s okay, sometimes you’re just not in the right position in life to own a house, so how do you know?
Here are four important questions to ask yourself before you buy a house.
#1. Are you ready to settle down for a while?
Homeownership is not for someone who likes to get up, travel all the time and balance from place to place. There’s nothing wrong with that, but if you’re not ready to settle down for at least five years, renting might be the best option right now. You don’t want to put all of your money into a house purchase only to lose equity in two years when you want to move or relocate.
#2. Are you ready for the responsibility of home maintenance?
You don’t have to be Mr. handyman, but it’s important to be able to take on the responsibility of fixing things yourself. You are the one responsible for replacing appliances and fixing any repairs the house might need. You can’t just call up the landlord to take care of things. You either have to fix them yourself or pay for them to be replaced or repaired.
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#3. Are you ready financially for the responsibility of a mortgage?
If you stop paying your rent, the landlord will eventually evict you. So will your bank if you stop paying your mortgage. But, not paying your mortgage is one of the biggest hits on your credit report. Take a look at your financial situation; get a copy of your credit history and report. Correct any errors, pay down any debts if you can, and make sure you have a good handle on your finances before applying for a home loan. Take a look at credit card debt, personal or car loans, student loans, and all of your income and outgo to find out if you are financially ready to undertake a mortgage.
#4. Are you ready for the down payment?
The down payment is one of the biggest chunks of change to go out during the home purchase. You have to be ready for at least a 3.5% down payment with an FHA loan or a 10% to 20% on a conventional loan. There are a lot of programs and loan options out there for zero down home loans, starter home loans, and first-time buyers so your options may be expansive but it’s important to have a little bit of cash reserve when you start the process.
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If you feel you are ready for the awesomeness that is homeownership, give us a call! We can help point you in the right direction and get you started with the pre-approval process and finding the right house.