If you’re tired of renting and you’re ready to put down roots, purchasing your first home can be an exciting milestone. However, it’s also a huge financial commitment that you should adequately prepare for ahead of time. Here are seven signs that you’re ready to buy your first home:
You have a steady job and income
Among other things, to be approved for a mortgage loan, you must have proof of a steady income. A steady job also ensures your ability to pay any other home expenses that may come your way. As a rule of thumb, if you have been at the same job for two or more years, you’re most likely financially stable enough to afford a mortgage.
You’re ready to settle down
You may be ready to buy a home if you have the next few years of your life plotted out with no anticipated major changes. You have a stable job, and you’re planning to stay in your current city for the foreseeable future.
If you’ve realized renting can be expensive and you’re ready to have a place to call your own, that’s a signal that you may be ready to settle down. Generally, if you are planning on staying in the same place for the next 5-10 years, you have enough commitment to the area to purchase your first home.
You have good credit
Credit scores for mortgage loan decisions normally range from 300-850. While having perfect credit isn’t a requirement to get a mortgage, a higher credit score often means qualifying for a better interest rate and the opportunity to make a lower monthly mortgage payment. Learn more about SouthEast Bank’s mortgage loan options here.
You have solid savings and an emergency fund
It’s important to expect the unexpected when it comes to homeownership. Unfortunately, repairs and expenses are simply part of the process. Faulty appliances, a broken air conditioning or heating system, fixing leaks and clogs and more can all be costly, so it’s important to be prepared. Ample savings and an emergency fund can help limit stress in the event of an unanticipated financial need.
You saved enough for your down payment
The down payment can be the biggest upfront cost when purchasing a home. Most home sales require a down payment between 3% and 20% of the cost of the home, depending on the type of loan. However, the bigger your down payment is, the more appeal you may have to a mortgage lender and the better mortgage rate you might qualify for. In addition, you might have more negotiating power with the seller.
You have good budgeting skills
To own a home, you have to consider all your expenses and be able to budget accordingly: utilities (gas, electric, water), mortgage payments, unexpected repairs and any other debts (e.g., car loan, student loans) you may already have. This means being able to make and stick to a monthly budget. If your budgeting skills are sub-par, you may want to reconsider your ability to purchase and maintain a home.
You know what you want and what you can afford
Chances are, you already have a good idea of what you are looking for in a future home, but when cost clashes with wants and needs, what are you willing to compromise? When looking to buy a new home, it is important to do ample research on mortgage loans, house prices, and location. If you set your priorities and your budget straight before looking for a home, you are more likely to stay disciplined during your search.
If any of these signs apply to you, you may be ready to take the plunge and purchase your first home. At SouthEast Bank, our mortgage consultants are there for you every step of the way. When you are ready to take the first steps to new homeownership, contact our mortgage team and let us walk you through the process.
Note: Links to other websites or references to services or applications are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site, service or application. SouthEast Bank does not control the content of these sites, services or applications.
Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.