Many people choose to rent property well into adulthood because they’re too scared to purchase a home. While it may seem frightening, the process of purchasing property isn’t anything to worry about when you have the right resources. If you’re thinking of buying a home in the near future, there are a lot of factors to take into consideration. Consider these few tips when deciding whether you’re ready to purchase a house.
Before you purchase a home, you want to make sure you have a substantial amount in your savings account. You may have enough for your deposit, and that’s great, but you never know what issues might crop up when you own a home. You can’t call your landlord to come fix the dishwasher or the pipes this time, so make sure you have enough in your savings that you won’t go broke from expenses beyond your mortgage.
When you decide you may want to purchase a home in the future, the first thing you should do is start building up your credit score. Your improved credit will likely “score” you (get it?) a better interest rate on your mortgage, meaning you’ll pay less each month. While you may want to act fast, think about how much money you’ll save in the long run if you improve your credit just a few points.
Another thing that will decrease your monthly mortgage payments is having a large down payment, which will take out a huge chunk of what you owe on the home. Taking time to save up 10%-20% will not only improve your chances of getting approved for a mortgage, but it may also get you a lower interest rate. Make sure you have enough saved up to cover not only the down payment, but the taxes, closing costs, and insurance.
Make sure you have job security before investing in a home. Not only do you want to be sure you’re making enough money to pay your mortgage, but you also need to know you’re staying in that area for quite some time. You shouldn’t purchase a home if you might be moving in the near future because of your career or your partner’s career. It will also help you get approved for your mortgage if you’ve been at your job for over two years, showing that you’re reliable for the payments. Use a house payment calculator to calculate how expensive a home you could (and should) purchase.