Posted by Jaymie Tarshis on 9:17 AM with 1 comment
I'm sure you didn't just wake up this morning and think, "I'm going to buy a home today." Hopefully, the decision to buy a home is something you've thought long and hard about. If you're like most first time home buyers, you've probably already made a list of your must-have qualities. Maybe it's that spacious kitchen you've always been wanting or a yard for your dog and kids one day. Either way, buying a home has to start with some serious thought.
6 must have qualities when buying your next home.
When it comes to making the decision to purchase a home many people fail to really consider their budget and financial goals. Would you like your house paid off in a short amount of time or is a longer lower payment mortgage for you? This is just one of many factors that will need to be considered.
So, how exactly do you determine if you are ready to a become a homeowner? Here's a checklist of financial and personal objectives to accomplish before you set out to make an offer on a home:
You know your budget like the back of your hand
Do you consider yourself an expertise on your budget? If not, you might want to start there. Budgeting is a skill that has to be learned through time and practice. Typically good budgeters know:
- How much gross income is brought in monthly
- How much of that gross income towards monthly debt and obligations
- How much money is left over each month to save
Successful money management will require knowing all of the above and monitoring it on a monthly basis. If this is something you feel good about already, go ahead and check it off the list!
You are in control of any debts
Having some debt is okay - not all debt means terrible things for your credit or ability to buy a home. Keep in mind that a mortgage is debt. Yes it's an investment of your money but you still have to pay it off over time.
As you can imagine, you'll want to get yourself out of any deep debt before entering into a mortgage. A car payment and one credit card payment is usually okay. However, six credit card payments is not.
Student loans are also considered a form of debt but can get exceptions in certain scenarios. Ask your lender more about this before beginning the loan process.
If you've managed to make all your debt payments on time and can manage a little more monthly obligation, then you might be ready to buy your first home.
You have an appropriate credit score
Most mortgage lenders will require a minimum credit score in order to qualify for a home loan. Even if you do end up qualifying with bad credit, your interest rate will likely cost you more money.
Generally speaking, having good credit history means that you'll end up paying less to own your home. Beefing up that credit score beforehand will make the process much more hassle free.
You are ready to learn how to do it yourself (DIY)
If you've rented before you've probably become used to your landlord fixing something whenever it goes wrong - and paying for the bill! The same case might apply to you living at home and your parent's doing all the work. However, buying a home is different because essentially you are the landlord now.
When anything breaks or goes wrong in your new home you will have to be prepared to fix it yourself or call someone who can. A lot of people forget this fact before buying a home. It's a good idea to sit down and ensure you can take on that much responsibility.
You are prepared for emergency's
I'm sure you've heard of home emergencies. Well, usually those come with a price. Every financially responsible adult should have an emergency fund. This is not only to help cover the cost of any damage or disaster, but ti will help cover your mortgage payment and other monthly bills so you don't get behind in the case of sickness, job loss, or other unexpected events that may occur.
You can commit to living in one place
Unless you're looking to buy a home solely as an investment property, you should plan on living and staying in it for at least 5 years. This will at least help you recoup the costs of the loan. It doesn't make sense financially to buy a home unless you are ready to commit living in it for a while.
You have saved enough for a down payment
This is the last step before you can officially get started on the home buying process. The larger your down payment, the less interest you'll end paying over time on your loan. Therefore, if you can save 20% instead of 5% you know you are in a good financial situation to buy a home.
Check out all of RANLife's mortgage options to find out how much of a down payment is required for each loan program. You'll want to keep this in mind while saving for your down payment.
Buying a home is a big commitment that can't be made up over night so it's important to consider if you are seriously ready. If you were successfully able to check off this whole list then congratulations! Home ownership may be in your near future.
To find out more information about buying a home please visit RANLife's website at www.ranlife.com or you can apply for a home loan directly by clicking here.