Somewhere between the mid-twenties and thirties, a lot of young adults begin buying homes. While some people do it sooner and others do it later, it’s not uncommon for many people to buy homes during these ages. As you progress, you’ll probably get tired of renting. As you tire of this, it’s good to begin looking at whether or not home ownership is for you. You don’t want to jump in just because your friends are. You’ll want to make a calculated and educated decision on if and how you’ll do it. Consider these four areas to decide whether or not you’re really prepared to buy your first home.
1. Savings for a Down Payment
While there are programs that allow you to put down 3-5% on your first home, you don’t want to always rely on that. A home is a really major purchase. When you’re making this type of purchase, it’s wise to set aside as much money as you can for a down payment. The more money you set aside for a down payment is, the less money you’ll need to take out for a mortgage loan. This equates to paying less in interest and paying a home off in a shorter amount of time. You don’t have to be riddled with debt forever. Be intentional about saving 10-20% of the home’s value and put down a good down payment.
2. Good Credit
If you have unpaid student loans, you need to get current with your debt payment. If you have a load of credit card debt, do your best to get rid of it. Your credit score plays a major role in whether or not banks can trust you and loan money to you. Your credit score shows your money patterns when it comes to debt and repayment. If you have a low credit score, you’ll need to work on raising it. Start by paying your bills on time. Pay off your debts.
3. Affordable Expenses
Understand that the expenses involved with an apartment are different when you buy a home. The mortgage payment doesn’t include utilities. In many cases, when you buy a home, you become a part of the community’s homeowners association (HOA). There are HOA fees and they can be pretty high. Before you buy a home, find out what the HOA fees are. Figure out how much you can afford in utilities and make sure you have enough to cover any potential home repairs.
4. Stable Income
In order to get approved for a home loan, you’ll need to have a strong work history and a stable income. Once you have both of these, you’ll be in great shape to really understand how much you can really afford. The lender will know that you are in a good financial position to purchase and sustain yourself.
These four tips are the essentials for you to look at when you’d like to buy a home. If you’ve looked at these tips and realized you still have work to do, be diligent about fixing your financial situation and get back on track. If you’re ready to buy, reach out to a realtor, such as one from Jeff Glover & Associates Realtors, and start the hunt for your dream home!