MORTGAGE BLOGBlog posted On March 23, 2022
Most people reach an age where they debate if buying a home is right for them. If you find yourself asking this question often, it might be time to evaluate if you’re really ready to buy a home. Here are six sure signs that will help you decide if you’re ready to transition from renting to owning.
It’s not uncommon for rent prices to rise. And when they do, it can be harder to budget and save for other financial goals. “If you’ve seen your rent escalate significantly but you feel trapped renting, the balance may be tipping toward buying,” says Bill Golden, a sales associate with RE/MAX Around Atlanta. Oftentimes, homeownership can offer more stability than rent, especially if you have a fixed-rate mortgage. With a fixed-rate mortgage, you can make consistent and predictable monthly payments that are not subject to change.
Low credit is often a reason that prevents many renters from applying for a home. If your credit is at a healthy place, that is another box checked off in your homeownership decision. If your credit is lower than you would like, there are several quick and efficient ways you can pump up your score.
Debt-to-income ratio is a strongly considered factor when you’re applying for a mortgage. To calculate your debt-to-income ratio, lenders will add up all your monthly debts such as student loans, auto loans, and credit card debt, then divide the sum by your gross monthly income. The lower your ratio, the better. While some programs allow for higher debt-to-income ratios than others, it’s best to aim for a ratio of below 50%.
Down payments are often one of the hardest parts of buying your first home. “First-time homebuyers don’t have proceeds from another home to help fund a down payment. It’s one of the main reasons why the down payment is the biggest hurdle to homeownership,” says Rob Chrane, CEO of Atlanta-based Down Payment Resource, which finds programs that help people buy homes. Luckily, there are several down payment assistance options and loan programs that can help you save faster and buy sooner.
When anything goes awry in a rental, you typically hand off the problem to a landlord. However, when you own your own home, you are the landlord. You are responsible for any maintenance that the home might need including burst pipes, faulty air conditioners, leaky roofs, etc. Many people who might be easier to buy a home soon realize they have not budgeted for home maintenance costs. “If you put everything you have into the down payment to buy a house, then you have no money left to do repairs should they come up,” Golden says. “You’re better off spending less on the house so you have some money to make improvements and repairs.”
Having a stable job, a reliable source of income, and a well supported lifestyle are all signs that you could be ready to take on the responsibility of homeownership. Even if you have a flexible source of income that varies per completed job, there are still loan options that can suit your needs such as the All In One Loan™.
But her first time is a big decision. But you don’t have to do it alone. Not only are we a Best Lender For First-Time Home Buyers ranked by Investopedia, but we have several resources and options that can help support you along your first home buying journey. If you have any other questions about buying your first home, let us know.
Sources: Bankrate
