Surefire Signs That You Are Ready To Buy A House

Is the idea of owning a home appealing to you? Maybe you have been renting for years and are at the point in your life where you feel you have enough income and savings that you can afford to own a home. Or, perhaps you are saving for a down payment and want to know if you’ll be ready within the next year or two. If you decide it is time to buy, it is important that you know when this is realistic – so that you can make an informed decision on how much house payment should be.

Are you ready to own your next home? The first step is always the hardest, but here are a few signs to determine if this is the right time for you to buy a home! Real estate is one of the largest purchases most people will ever make. Rising property values and low interest rates have made homeownership more affordable than it has been in decades.

The opportunity to become a homeowner can be both emotionally and financially rewarding when you have a long-term horizon. By following some sound first-time buyer tips, you’ll ensure that your journey from renting to owner goes smoothly.

The following are some of the most common reasons why renters decide now is the time to own a home:

1. Your Rent Keeps Increasing

In most areas of the country, rents are rising and rising. The increase in rental prices can be frustrating for numerous reasons. You cannot anticipate your housing costs over the long term, which makes it hard to plan your finances.  In recent years, rents have risen sharply in many regions of the United States. The good news is that mortgage rates have remained near historic lows over the same period of time. In other words, if your rent is rising, the monthly cost of homeownership might actually be lower than what you are paying for rent – even when you factor in things like property taxes and home insurance. As such, if your rent has recently increased, now might be the perfect time to consider buying a home.

2. Interest Rates Are Incredibly Attractive; You Can Afford the Monthly Payment

One of the better reasons to go from renting to owning a home is when money is unbelievably cheap. When interest rates on mortgages are desirable, it’s like a flashing sign that says “buy buy buy.” Interest rates won’t stay at record lows forever. History shows us that they can turn instead quickly.

When they do, it will be a lost opportunity if you were in a position to buy. Low interest rates are an excellent reason to consider purchasing a home.

With low interest rates, even those who feel they can't afford a mortgage payment may be able to purchase a home. With higher interest rates, purchasing may not be possible for many people. But with today's low rates, many people can afford the monthly payment needed to own their own house and stop throwing away money each month on rent that only benefits their landlord and not themselves or their family! And if you're thinking you need 20% down to buy a house, you're wrong. There are many options ranging from 0% on up for downpayment.

3. You Have a History of Managing Your Debt Well

You are ready to become a homeowner if you have been managing your debt well. Your debt-to-income ratio (DTI) is one of the most important factors that lenders look at when determining whether or not to lend you money to buy a home.

You can calculate your debt to income easily by adding up all of your monthly debt payments. Once you know what your monthly debts cost, you can divide that number by your gross monthly income.

If you have high balances on your credit cards, you can pay them down to look more appealing to lenders. You do not have to pay them off completely.

4. You Think it’s Time to Put Down Roots in a Specific Place

You’re thinking about moving to a new city. You’ve heard good things about this place and its career opportunities, but you don’t want to rent forever. When you think about your life in this new city, you see yourself putting down roots and buying a home.

You’re working toward goals, and you want a nice space to work in. You need to get things done. You want a place to come back to after a hard day, or a place to leave on vacation when the weekend comes.

Purchasing a home requires paying a lot of costs at the beginning that cannot be recouped in the first few years of ownership. In other words, for a home purchase to make financial sense, you need to be ready to stick around for a while. Over time, the investment can prove quite positive, but it does take time.

5. You Have a Specific Home or Neighborhood You’ve Pictured Yourself in

There are some deeply emotional reasons why a buyer may want to own a particular home or live in the neighborhood they’ve been dreaming about. There are clients who want to live near family members, and others who would like to be close to the local schools.

When it comes to falling in love with a particular property, buyers can feel strongly about owning that home for various reasons. They might like the mature trees on the property, or maybe the way it sits on its lot? Perhaps there is a floor plan that appeals to them or something else?

If you have your heart set on one particular home and you have done your homework and know that it is in excellent shape, then it may be worth bidding over asking price. If you don’t get the house you wanted, keep looking. If you happen to lose out on several properties, then you might need to adjust your expectations until you find a property that meets your requirements.

6. You Are Sick of Pouring Money Into Someone Else’s Mortgage

No more rent increases. Once you buy a home, you have your mortgage payment for the life of the loan. You can always refinance down the road if interest rates drop, but there will be no surprises with an annual rent increase.

A home is an investment in your future . If you stick around long enough, when it comes time to sell, you could have a sizable real estate capital gains exclusion. If you are single, the tax exclusions will be $250,000; if you’re married, the exclusion will jump to $500,000 (subject to certain limitations). The mortgage interest deduction . You may be able to deduct your mortgage interest expenses on your federal tax return.

7. You Have the Financial Stability to Save for an Emergency Fund

Having a financial emergency fund is essential to protecting yourself from unforeseen expenses or a loss of income. Without an emergency fund, you may be forced to use credit cards to cover unexpected costs, which could put you in debt and damage your credit score. An emergency fund can help you stay on track with your finances while you get back on your feet.

While you can put off replacing a dishwasher (or washing dishes by hand), it’s not the same when it comes to fixing a broken air conditioner on a hot summer day, or a furnace on a cold winter night. Those kinds of repairs are often immediate—and expensive—because you have no choice but to fix them right away. You also have little leverage in terms of negotiating prices, because these types of repairs tend to be highly specialized and there may only be one or two companies in your area who can do this kind of work.

8. You Are Ready to Pay a Down Payment and Closing Costs

If you can come up with 3% down and qualify for the right loan—and have your closing costs in order—you can likely become a homeowner.

When buying a fixer-upper, you may also want to consider an FHA 203k loan which allows for rolling the costs of improvements into one mortgage.

Be prepared to show that your finances are stable and you have enough money for a down payment and closing costs. You’ll also need enough cash stashed away for emergencies in case you need to make repairs or pay unexpected bills once you move in.

9. Improved Credit Score

If you have good credit, your credit score will be above 600. This is considered a fair credit score and will be high enough for most lenders to approve your mortgage application.

If you have improved your credit score, it may be time to talk to a lender about what you can do to get a mortgage. You can sometimes qualify for a mortgage with a credit score of 500—but that does not mean it will be a mortgage that you want.

The credit score you bring to lenders will play a significant role in the type of financing you can get. The worse your credit score, the fewer options you have available when buying a home. That is why it is essential to do what you can to improve your credit score before you go to try and buy a home.

The better your credit score, the more options you will have, and the more money you can save on your mortgage.

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Be sure to make a list of your priorities, so that you can accurately compare renting and buying. The information you have gathered will help you make an informed decision that fits your needs. Once you have moved into a house of your own, it feels great knowing that you are building equity in a place you call home.

It is a lot of responsibility to purchase a home, but with the right effort, you should be able to enjoy not only the benefits of your new home but comfort as well. Good luck! And as always, we are here to help.

Want to buy a home but not finding any in a neighborhood you like? Send us a message and we will launch a special marketing campaign just for you! That's right! We have a track record of helping our clients find properties before they hit the market! We are here for YOU, and it would be our honor to help out in any way we can! :)