Are you confused about whether it’s the right time to buy a new house or not? Buying a home is an important milestone in life that usually takes months of research and planning. However, the
5 Signs That You’re Ready to Buy a House
Dated: March 24 2022
Are you confused about whether it’s the right time to buy a new house or not? Buying a home is an important milestone in life that usually takes months of research and planning. However, the first step towards buying a new house is mentally and financially preparing yourself.
Here are a few ways you can prepare yourself for the role of a homeowner before actually shopping for a home:
Check Your Debt
The first thing to look at is your debt-to-income (DTI) ratio. According to Nerd Wallet, a DTI of under 36% is considered to be a good score - this means that out of your total monthly income, no more than 36% should go towards paying off debts. It would be ideal that you try and pay off as much of your debt as possible before looking for house financing in order to ease your future mortgage payments.
Increase Your Credit Score
Paying off debts also helps to improve your credit score - and the better your credit is, the greater chances you have for securing better terms and a lower interest rate on your mortgage. When applying for a conventional loan, it’s recommended that you have a credit score of 620 or higher. However, some loan programs do approve loans at lower credit scores as well.
Have An Emergency Fund
Sometimes, life happens, and it's always better to be prepared for the unexpected even if you think you have it all figured out. For this reason, it’s a good idea to have some extra amount saved up for a rainy day.
Consider a Down Payment
Apart from an emergency fund, you also need to save up for a down payment on the house. Most loan programs require a minimum 20% down payment. However, some down payment assistance programs can help you make as little as a 3.5% down payment if you qualify. As a general rule, though, the higher the down payment, the lower your monthly mortgage payments.
Have a Preference Checklist
Everyone has preferences when planning to buy a home. While some prioritize its location, others consider factors such as its proximity to school districts or the neighborhood amenities available. So, it’s important to list out your preferences and be clear about what you want - this will also help your Realtor show you only those properties that fit the bill.
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I live in McKinney with my wife of 26 years and four children. I have 18 years experience in real estate and enjoy helping people achieve their real estate goals and walking my clients through the pro....
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