One of the most exciting yet frightening experiences can be buying your own house. In fact, not only can it drain your bank account but it can mean making a lot of sacrifices. These signs can help you figure out whether you’re ready to make such a life-changing purchase or not.
You’re Ready to Live in One Area Long-Term
Since buying a home is a big investment, it’s wise to consider if you’re looking to live in a certain area for five years or longer. For instance, it might not make the most sense financially to only stay a few years because closing costs can be high. So if you’re planning on starting a family or are getting older, it can be smarter to live securely. Indeed, NC custom home builders, or the homebuilders in your area, can help you build your dream home so your family can enjoy it for years to come.
You’ve Earned a Stable Income for Years
Being able to show you’ve had a stable income in the past and that it will continue to be secure for years is one way to know you’re ready to buy. Further, you need to feel comfortable with how you earn money. This can be particularly challenging for those who are self-employed. For example, lenders need proof of income such as pay stubs and tax returns from the past two years or more.
You Have Sufficient Funds for a Down Payment
A down payment for a home can be particularly expensive. This can be anywhere from 3% of the purchase price all the way up to 20%. Further, you can save on interest over the loan’s life by putting down the largest down payment you can. Plus, you may even have a lower interest rate to start with when you pay a higher down payment. This makes it vital to start saving now to avoid complications later on.
You Have an Emergency Fund to Tide You Over
Whether you have unexpected expenses or are not currently working, having an emergency fund can be a lifesaver. As repairs and maintenance can be common, especially among older homes, not having sufficient funds to tide you over can only make matters worse. Despite the fact a newly built home may not need to be repaired yet, making wise savings decisions can be extremely helpful in the future in the case of any uncertainties.
You’re Capable of Comfortably Managing Debt
If you’ve demonstrated in the past that you’re able to manage debt responsibly, then your home loan terms will be more favorable. Additionally, having a higher credit score means lenders see you as someone to trust. According to FICO, a good credit score is 700 but 740 can help you get the best rates. On the other hand, not having a credit history can make it impossible to get a mortgage. In this case, it’s vital to start building credit with a secured loan, low-limit credit card, or in some other way.
You’re Mature Enough to Understand Sacrifices
One thing to consider is your future plans such as starting a business or family. But if having a house stops you from having fun, then maybe it’s not for you. For one, the financial cost or inability to travel as often may stop you from becoming a homeowner. Besides this, costs include taxes, insurance, monthly payments, and closing costs. Consequently, you may need to sacrifice going out to dinner every Friday night, traveling on a regular basis, and other luxuries so you can afford the financial side of homeownership. Being realistic about what bothers you can be helpful in understanding what’s best for your lifestyle. In addition, using a mortgage calculator can help you figure out what you’ll be paying. Paying attention to if having a house makes you uncomfortable can help you make a final decision on whether it’s right for you or not.
Although having a house to call your own can be a great way to settle down in one neighborhood, it can also mean having extra responsibilities. With this in mind, it can be highly important to know yourself and what you want in your life now and in the future.