Adulthood comes quickly, and with it comes many unexpected responsibilities. These responsibilities include shopping for groceries, washing the laundry… and dishes, considering the possibilities of roommates or a spouse or even raising the much shorter roommates, aka kids.
One of the ideas that comes with adulthood is owning you own home.
Buying a house is something you’ll consider sooner or later because, true or not, owning a home is a sign of stability and maturity. While you may just be tired of renting, there are other great reasons to buy a house. One good reason is that our tax laws favor homeowners, so ownership offers an excellent tax shelter.
How to Know If You’re Ready to Buy Your First Home
Buying your first home is a very special and exciting experience. It’s a process that takes a lot of time and planning. You don’t wake up one day and suddenly decide to give away your savings to purchase a house.
While some plan for it for years, others can seal the deal in a matter of weeks – the decision-making process varies from person to person. However, there are some universal signs that you’re ready to buy your first house:
1. You Don’t Want to Rent Anymore
If you’re a young person who has been working for quite a few years, chances are you’ve been a tenant at one or more places already.
While the nomadic life seems fun at first, after a while you just don’t want to rent or live with mom and dad anymore. Having a place to call your own has its benefits such as not having to answer to a landlord or a parent. Being a homeowner gives you freedom.
Additionally, if you feel you belong in a particular city and feel quite certain that you will be staying there for several years, it is unquestionably a good idea to buy a home there.
Related Video: Are You Ready to Move
2. You Have a Secure Job
As a young adult, it may take a while to find solid footing in your chosen profession. However, after working for a few years, you may finally find stability in a company and be ready for a long term position.
Having that job security will allow you to make financial decisions that you couldn’t before – which includes buying a house.
If you have a job that offers you good work-life balance, health benefits and other advantages, you may want to make use of that security to invest in a house of your own.
3. Your Finances are in Good Shape
Apart from a steady job, there are several ways to account for a steady financial situation. This could be through investments in real estate, the stock market, a part-time “side hustle” where you have followed your passion and turned it into a prosperous business on the side.
Just take a look at your finances, and see what the recurring monthly expenses are. Learn the benefits both of locking in a payment that won’t change for 30 years and having a place to start your very own business that can act as a tax write off. In any case, you should begin to consider pooling your savings towards a new home.
4. You’re Ready for Commitment
A very good reason to buy your own house is if you’re planning to get married or are moving in with a partner. Having a studio or a one-bedroom apartment will be fine if you’re living on your own with a pet.
However, if there’s someone else to consider in your life and the two of you are about to be married or move in together, you’ll need to plan together. This is the perfect opportunity to buy your first house and build on your partnership together.
Commitment also relates to mental maturity – once you feel mentally responsible enough to get your own place, go for it.
5. You Genuinely Need More Space
Are you about to have a child? Then you definitely need more space. This is the perfect time to buy your own home. It’ll give your children more space to move about freely, without bumping into each other and invading personal spaces.
You might also need more room if you want to set up a corner for yourself – to practice hobbies, work from home, etc. Some extra breathing room from the kids is always a great add, either way.
6. You’re free of Debt
Paying bills and having debt is an obvious concern when you’re considering the additional expenses of a home. However, if you aren’t in any significant debt, and your credit card bills are clear, then now is a good time to consider investing in a new house.
With money available to pay your mortgage and disposable income for the other expenses of owning a house – this is one of the safest periods to buy a home.
7. You Have a Good Credit Score
When you apply for a mortgage, banks and lenders will look at your credit score in order to ensure that you can pay them back on time. If you have a good credit score, you should have no worries.
Your credit score reflects on your past expenditures and activities related to timely repayments. A credit score above 720 is considered stellar, but yours can be anywhere between 300 to 850. Our team will provide a complimentary credit report and analysis to teach you how to boost your points before getting locked into a higher interest rate.
Only once you’ve established a good credit score, should you consider homeownership, lest you be straddled with extremely high interest rates.
Related Video: How Does My Score Impact My Loan
Free Credit Check Tool – sponsored by the government to run your credit once per year or follow our link to get a free triple score, absolutely no official application required, and our website is completely www.maresmortgage.com/credit-authorization/
8. You Have a Down Payment
Many experts say that you should have about 20% of the total cost of your house saved for a down payment. Even if you have 3% to 10% of it available outside of your other savings, consider yourself ready to buy a house depending on the area you plan to live.
It would be ideal if you could pay 15% or 20% as a down payment so that you can avoid the requirement of PMI (Private Mortgage Insurance). But if you’re unable pay that much, here at Mares Mortgage, we have programs to eliminate PMI (Private Mortgage Insurance) without putting 20% down.
The more you pay as a down payment, the lower your monthly payments will be. This will make your financial position, post-purchase, much stronger.
Related article: Benefits of Buying a Home
9. Understand the Market
There are many things you need to figure out before buying a house of your own. These include knowing which neighborhood fits your lifestyle, which mortgage broker or banker offers the best mortgage options, how the real estate market is faring, and what changes in the rates are expected.
If you favor a particular area, you may want that to be the locale of your first home. And once you’re confident that you understand property values and the real estate market, it will be a good time to move forward in the buying process.
10. You Feel Emotionally Prepared
Purchasing a new house is challenging in many ways. Regardless of whether you’re moving to the new place alone, with your partner, or with your family, the process can be overwhelming.
So do this only if you feel emotionally ready and not involved in any other complicated situations.
There will be several things that are likely to go wrong and hurdles that you will have to overcome. This kind of stressful situation can be made much worse if you aren’t mentally prepared.
This also includes dealing with circumstances post-closing, such as decorating, unexpected repairs, or moving.
11. Can You Do Repairs?
When you take on the responsibility of a house, you can expect things to break. When you’re a renter, you have the convenience of reporting any problems to your landlord and waiting for them to respond. But not so when you’re the owner. A broken dishwasher or a leaky faucet may seem like small things, but they can complicate daily life.
If you can do basic repair jobs yourself, you will save yourself a lot of money. But if you don’t have the know-how, repairs can be quite expensive and you should be prepared for that.
12. You Know What Type of House You Want
Having put a lot of thought into the type of house you want is a good sign that you’re ready to buy your first home. Whether it’s a single-family home, a duplex, a townhouse, or a really nice apartment, you can choose according to the lifestyle you want. Some of these choices can have added financial benefits, such as being a less expensive first home, or as in the case of a duplex, a rental income – if you live on one side and rent out the other side.
A sign that you’re actually ready to buy your first home and not just fantasizing about is, is that you are being honest with yourself about where you are financially and what you can afford. While it’s exciting to dream about huge, elaborately furnished mansions with extensive landscaping.
But most of us won’t be able to afford a lavish home at the beginning of the ownership journey. It’s more realistic to buy a modest and affordable first home, while you build your savings toward your forever home.
There is also work to do in buying a home – the preparation and the process. When you can honestly say that you’re ready for that work, you’re ready.
14. It Feels Right
It’s not easy to admit, but most of us know when it’s time to move ahead with a big step in our lives. An overwhelming sense that the time is right, can also be an indicator that you’re ready to buy your first home. You just feel a strong confidence that things are going to go well for you, and if challenges arise, you’ll be able to deal with it. While you don’t want to focus solely on the intuitive sense of confidence, you shouldn’t ignore it either.
15. You Know When To Call In the Professionals
A sign of readiness is to know when the knowledge you need must be gained from the industry professionals. You know you need to find an expert realtor who can show you homes in your price range and explain any relevant information you need to know. You know that you need to find a good lender who will present all of your options, with a view to finding the best one for you. You realize you’ll need a buyer’s agent – one who is working solely for your benefit and not the seller’s.
It’s a great feeling to buy your first home; it’s your baby and there’s so much you want to do with it. However, there’s a unique responsibility that comes with being a homeowner, before, as well as, after the process.
You have to be mentally and financially prepared to face all the challenges and duties about to come your way when buying your first home.
If you truly feel that your financial situation is secure enough and you can handle all the normal expenses, in addition to paying off your mortgage and other house-related expenditures, it’s time to take the leap. Homeownership is one of the most rewarding parts of adulthood.
Related article: First Home Buying Tips and Tricks