5 Signs You’re Ready to Buy a Home

The transition from renting a home to becoming a homeowner can be overwhelming. While homeownership offers many advantages including tax benefits, financial security, and the pride that comes with taking care of your own place, it also comes with added responsibility. When something breaks in your rental unit, it’s a quick call to the landlord to get it fixed. Homeowners are on the hook for both making repairs and financing repairs. It is a big financial leap to becoming a homeowner.

Here are 5 signs that show you are ready for homeownership:

No more debt

You finally paid off your outstanding credit card debt and car debt, so you don’t have those extra bills dragging you down each month. Instead, you have funds available to pay for a mortgage. The extra cash flow will also help you cover other expenses related to being a homeowner such as property tax, homeowners’ insurance, repairs, and furnishings.

You have saved enough for the down payment

There are a few up-front costs associated with buying a home. The biggest expense is the down payment. Depending on which type of mortgage you qualify for, you are looking at a down payment between 3%-20% of the purchase price

You have good credit

Having perfect credit isn’t a requirement to get approved for a mortgage anymore. If your credit score is at least 640, your odds of getting approved are much higher. Lenders look at more than just your credit score. If you have only missed 1 payment in the last 12 months, you are more likely to qualify.

You can afford to make repairs

Renting is easier in many respects. If anything in your rental home breaks such as your dishwasher, plumbing, or ceiling fan, you make a call to the landlord and they fix it, costing you nothing. When you have a mortgage, you’re responsible for any and all repairs needed. However, you can buy a home warranty plan which will cover a lot of repairs for a fixed monthly cost. 

Know what you want and how much you want to spend

It is important to research what you can afford in terms of a down payment, monthly mortgage, and home features. You will also need to understand how home prices work in terms of location. Some factors to consider include school district, commute time to work, amenities included with the home, and crime rates in that area.