Are You Financially Ready to Purchase a Home?
There are many factors to consider when determining whether you are ready to purchase a home; perhaps one of the most important is your financial state. Use these indicators to decide whether all signs point to “go.”
· Your credit is in good shape. If you are even considering buying a home, this is a given. Having a great credit score and low debts will show that you are ready for the purchase process and the expenses that inevitably come after moving into a new home. Stay away from purchases during the loan process especially as this can change your debt to income ratios and ruin your loan eligibility.
· You have a down payment. For a traditional loan, down payments can be as much as 20% and typically average around 10%. There are various other options for lower down payments these days but it’s always good to be prepared with enough down payment and expenses after moving in.
You follow a budget. Having a budget and following it will help you be a responsible home owner. There are different expenses when you own a home than when you rent. Good planning skills will help you manage those costs.
· You have a steady income and an emergency savings fund. These two things go hand in hand to show you have the funds to manage the monthly payments on a home. A steady income will ensure that you can pay your mortgage and related expenses. The emergency savings fund will give you some stability in case your steady income stream is interrupted for any reason.
If you evaluate the indicators and feel comfortable that you are in good shape in each area, you are likely ready to purchase a home.