Buying a home is probably one of the biggest decisions you’ll make in your life. Most people need a lot of time before they can buy their first home. So they settle with renting first while preparing their savings and growing their careers.
But when is it safe to buy your first home? How much money do you need to save? Looking at land for sale and listings of homes can be very exciting, but adequate preparation is needed to be a homeowner. Here are some signs you’re ready to buy your first home.
You have enough money on your savings.
Buying a home is going to involve a lot of expenses, such as tax, document fees and the down payment. The latter is probably the most burdensome of all. Sure, your mortgage lender will shoulder the initial cost, and you have the comfort of paying it in arrears. But most loans require between three to 20% of the purchase price as a down payment.
To ensure your financial stability when you buy your first home, have more than enough saved up for the down payment, as well as your living necessities. Make sure you have enough to sustain your daily meals, bills and other obligations while saving up for the down payment and having at least three to six months’ worth of income for emergencies.
You have a good credit standing.
Your transaction with your mortgage lender and the home seller would require a look into your financial credits. These people want to make sure that you can afford to buy the home. And by doing this, they’re not only protecting themselves but you as well. You wouldn’t want to bite off more than you can chew, right?
Your credit will determine whether you can get approved for a mortgage and buy your home. A high credit score and good standing will increase the likelihood of your approval. And it might also get you additional benefits and perks.
You can afford the mortgage.
Unless you have the entire cost of the house in your savings, you’re going to need to work with a mortgage lender. A mortgage loan gives you the ‘buy now, pay later’ benefit. The lender shoulders the cost of the home, and in return, you pay the value in arrears, plus the interest and lender’s fee. You need to earn enough to afford the mortgage payments.
The price of the monthly payment depends on the loan terms or programs that you have chosen. Do your research on mortgage types, interest rates and fees, so you can determine if you are capable of paying them.
You have a steady source of income.
Buying a home is not a one-shot kind of expense. You’re going to spend money on it for a long time. Mortgage loans, for example, can be payable for more than 40 years. So before anything else, you want to make sure that your employment situation is stable enough to provide for you in the future.
Take a look at the current sources of your salary. Will you still have the same salary or more five years from now? Or is your employment status a little flimsy? If you’ve been in your company for at least two years, that’s a sign of steady income.
There are a lot of things to consider before you can buy your first home. Make sure you’ve achieved the items on this list before making this big decision.