“Am I ready to buy a house, or should I just keep renting?”
It is one of the questions that we hear most often and something
to which first-time home buyers often spend months, if not years,
trying to figure out the answer.
Below are a list of four tell-tale signs that you are ready to bite
the bullet and take the leap into home ownership:
Sign #1: You are ready to settle down
The first sign that you are in the right mindset to become a
homeowner is that you are ready to stay put -- at least for a little while.
Conventional wisdom states that in order for your purchase to
make financial sense, you’ll want to plan on staying put for at
least the next five years. When you sit down to think about house
hunting, you’ll want to use that time frame as your reference point.
Ask yourself the following questions:
Can you see yourself staying at your job for that
long, or will you be looking for new opportunities?
If the right position came along, would you be willing
to move for it?
Do you like the area you are living in, or would you
like to explore other options?
Do you see your living situation changing soon?
Are you planning on moving in with a significant
other or expanding your family?
If these questions make you squirmy, the idea of looking five
years into the future still feels a little too far ahead for you to
grasp, or you still want to see where life life takes you, you may
want to consider renting for a bit longer or thinking about
2. You are done living paycheck-to-paycheck
Let’s face it, becoming a homeowner is expensive.
Not only is there a monthly mortgage mortgage payment to
consider, which will likely be more than your current rent
check, but prospective home buyers need to be prepared to
come up with a sizable down payment, shoulder a portion
of the closing costs, and have the dough to take care of any
Luckily, there is a way that you can prepare for the added
financial pressure before the big day comes and understand
how much house you can afford. Use a mortgage calculator
to estimate what a monthly payment could based on the
type of home you are looking to buy. Then, subtract the
amount you pay in rent each month, and aim to put the
the remainder into savings.
Start by working towards a down payment that could
be worth 3%-10% of a home’s sale price, and then move
onto a separate emergency fund.
3. You are ready for more responsibility
Once you find a home and actually buy it, that is really
where all the fun begins.
Yes, owning a home means that you have a lot more
freedom to improve the property as you see fit --
whether that means putting in an entirely new kitchen
or redoing the hardwood floors.
However, in addition to that creative freedom comes
an added layer of responsibility. As the homeowner,
you are the one who is responsible for any necessary
maintenance and upkeep on the property.
Think about what you are like as a tenant now.
Are you willing to roll up your sleeves and help
with small tasks or are you relieved to know that
you have someone to call? If you are less handy,
you may want to take some time to familiarize yourself
with common home maintenance tasks before committing
to buying anything. It always helps to have a fair idea of
what you are getting into.
4. You know what you are looking for
Last, but not least, though it may sound self-explanatory,
when you are trying to determine whether or not you are
ready to buy a home, it is useful to have an idea of what
you are looking for.
You don’t have to have every single detail set in stone.
(In fact, it is preferable if you leave some room to flexibility
in your home search.) That said, though, having a basic
set of parameters in mind will make the home buying
process go much easier.
Here, you’ll want to think about the most important
factors that you absolutely must have in a home. These
will be the things that you would not feel comfortable
buying a home without. This may include details like
your preferred location, an ideal number of bedrooms and
bathrooms, a target sale price, or any specific must-have
features like that perfect picture window view.
If you have a strong idea of your must-haves and can't
see that changing in the near future, and the above signs
sound like you, you may just be ready to take the
plunge into home ownership. If not, there is no
shame in the game waiting.