Mortgage rates are at all-time lows and cute houses keep catching your eye online and on your daily runs. Before you call the real estate agent on the next sign you see, ask yourself these five questions to determine if you are ready to be a homeowner.
1. Do you plan to stay in the same place for at the least a few years? Homes don’t have to be forever but they don’t expire like a lease on a certain date and no longer are your responsibility. Once you own a home, you are responsible for that home indefinitely unless you choose to sell it. Historically, homes appreciate but it will take a little time for that to happen and make it likely for you to sell your home for more than you paid. If you only plan to stay where you are for a year or two, you may be better off renting.
2. Do you have the time, skill and desire to tackle home projects when they come up? It may be something as simple as painting the fence or repairing a running toilet? Whatever the issue is, it will need to be taken care of since you can’t just call the landlord. If you aren’t handy or don’t have time to fix things, that’s okay as long as you can afford to pay someone to make the repairs.
3. Is your income sufficient for a mortgage and do you have savings to cover a down payment on your home? There isn’t a specific amount you should have saved to buy a house. It is relative to the cost of the home you are purchasing. Your income should be stable and your employment history strong if you want to qualify for a mortgage.
4. What is your credit score? If you don’t know, order a credit report today. Mortgage lenders will check your credit score before they agree to lend you money. If your credit report shows more debt than your income can cover and a less than stellar payment history, lenders may deny you for a mortgage. Don’t let their decision surprise you. If your credit needs work, take care of that before you try to buy a home.
5. Do you have enough money in your savings to cover your down payment and an emergency fund? Remember, when the hot water heater goes out or the air conditioner stops working, you don’t have a landlord to call. You will be responsible for paying for the repairs so you need to have sufficient savings so that is possible.
Owning your own home can be a great way to invest in your future and finally be able to customize your home the way you choose but it is a big responsibility so make sure you take time to think through this decision before you rush right out and buy a house.