How do you know when its time to buy a house?

Howdy,

How do you know when its time to buy a house?

First and foremost, you need to look at your personal situation. You need to ask yourself some questions.

1.) Do I plan on living in the same place for the next few years?

In a house transaction, neither the Buyer or Seller normally pay any fees to a Real Estate Agent.

All fees are paid to the buyers and sellers agents, thru a contract that the sellers/listing agent agreed upon. Those fees are paid directly from Escrow. The cost of putting a house on the market within only a few years of the time you purchase it, may very well result in a loss, as most Agents charge 5-7% as commission, which is split between both agents.

2.) Can I afford to buy a house? How much of a mortgage payment can I comfortably afford?

Most lenders use the 28/36 rule. In short, your monthly household debt, should not exceed 28 percent of your gross monthly income. Your total debt, including your house payments plus ALL other payments, should not exceed 36 percent of your gross monthly income.

FHA loans use slightly higher numbers, but I will get more into that in another.

Please feel free to use my Mortgage Calculator.

3.) What do my credit look like?

The 3 Credit bureau's are TransUnion, Experian and Equifax. They are all required to provide you with a FREE copy of your credit report once a year. Several months prior to looking for your first house, its a good idea to confirm everything on there is correct. You can dispute any issues that arrise. If you are behind on any charge accounts, or you have a high debt to income ratio, it may be a better idea to pay it down, before attempting to get into a house.

4.) How much do I need for a Down payment?

Depending on what type of loan you are applying for, will determine what type of down payment you are looking for. An FHA loan will only require a 3.5% down payment, however, its has several requirements, which I will get into in another thread.

A conventional loan will generally require a 20% down payment.

VA loans work completely different. If you think you qualify, speak to a Realtor who can point you to a lender who is well versed in VA loans.

Pleae keep in mind that every bank and every state is different.