Tired of renting or living with roommates? Ready to buy your first home?
Buying a home is an exciting thing to consider. It’s fun to look at houses, dream about decor and fantasize about pulling into your own driveway after work. But how do you know you’re really ready to take (what will probably be) the biggest financial move of your life?
Here are five things to consider:
Financial stability. Are you settled into a career path and on an upward trajectory? Or, are you switching jobs every year because you get bored or can’t find the right professional fit? Your financial stability is an important factor in whether you’re ready to buy a home. Part of the reason for this is because your mortgage lender will look at your past several years of finances, and they will want to see that you’re stable and trustworthy from a financial standpoint.
Creditworthiness. What’s your credit score? If it’s in good shape and has been in good shape for a while (or it has been rising consistently for the past couple of years), you can probably move forward. If your credit score is not great or it has taken a major hit in the past couple of years, you may need to do some damage control before you buy a house. Having a high and stable (or increasing) credit score will signal to a lender that you’re ready for this big financial move. You can always talk to a certified financial counselor through CommonWealth One for advice on how to boost your credit score and keep it high.
Downpayment savings. You don’t always have to put down 20% on the house of your dreams, but it looks good to lenders if you're coming to the table with a chunk of savings you can use toward your purchase. It shows that you’re financially responsible and capable of saving money. There are a lot of first-time homebuyer programs that can reduce the amount you need to put down on a home, which would free up those savings for repairs or emergencies, but you should have some savings when you consider buying a home.
Understanding the current market. Real estate has been on a roller coaster the past few years! Home prices are up, but so are interest rates and the cost of insurance and taxes. Your best bet is to have an information meeting with a qualified Realtor who can help you understand what's going on in your area and what you need to know before you talk to a lender.
Your goals and plans. In addition to the factors above, you should evaluate your short-term and long-term goals and any upcoming lifestyle changes. Are you staying in the area for a few years, at least, or are you planning a big move in the next five years? Are you getting married or ready to settle down, or do you like having the flexibility of renting? Are you ready to take on responsibility for home repairs or landscaping? Again, talking to a Realtor here would be helpful in deciding if you’re ready to make the move up into homeownership.
In addition to talking to a Realtor, you should sit down for a no-obligation consultation with one of our Member Advantage Mortgage loan officers, who can help you understand the current market, interest rates, first-time homebuyer programs and more.
Happy house hunting!
