Buying your first home is an undeniably exhilarating experience, not to mention a landmark event in anyone’s life that screams financial success. However, it’s still crucial to buy a home when you are definitely ready to afford the financial responsibility.
Because buying a home is not a once-off cost, you will still need to afford additional ongoing costs like property taxes, utilities, property maintenance, and a few others; you need to know for sure you are ready to take on the costs.
Here are five definitive signs that you are ready to buy your first property.
You Have A 20% Down Payment Saved
Even when relying on a mortgage loan, you will still need to pay a 20% down payment. This amount must be 20% of the total mortgage loan amount. This shows that you are financially stable and serious about buying a property. It also decreases your mortgage amount, which will result in smaller monthly payments. Without a down payment, you might not receive approval for financial assistance.
So, if you have saved a 20% down payment, you can start house hunting for homes for sale in Mcdonough, GA, and other areas.
You Can Afford Monthly Mortgage Repayments
Your mortgage repayment amount will depend on the mortgage loan total. To determine if you can afford the repayments, you will need to use a mortgage repayment calculator that will calculate your repayments concerning interest and any other relevant factors.
If you can afford these repayments, you can start browsing property listings in areas of interest.
Your Credit Score Is Good
Your credit score is one of the most important factors lenders look at when considering a home loan. A good credit score will ensure you get the best interest rates and terms on your mortgage loan. If your credit score is currently lower than it should be, lenders will reject your loan application instantly, even if you can afford the repayments.
If your credit score is low, you can improve it by paying debts on time, using credit wisely, saving money monthly, and reducing debts.
Your Debt Is Manageable
The less debt and credit you have, the more financial control and stability you will have in general. Even though the amount of debt you have might not influence lender choice, granted you meet the criteria for a mortgage loan, buying a home is not a wise move if you aren’t managing your debts well at the moment.
Reduce your debts using the snowball method and consider buying a home when you are fully able to manage your debts and credit usage.
You Have A Stable Income
If you have a down payment, your credit score is excellent, you don’t have much debt, yet your income is not stable, buying a home might not be a great decision. You don’t have to be making six figures annually to buy a home, but you do need to have a steady job with a dependable income. Lenders like to see that you have been working at your current job for at least two years and that your income is increasing.
If you don’t have a stable income to cover the monthly repayments, you won’t receive pre-approval for a mortgage loan, and even if you did, you might later be buried by the financial burden.
Buying a property is a big and sometimes stressful decision, so before you start shopping around and browsing listings, it’s crucial to be absolutely confident that you can afford the financial responsibility. Because a mortgage loan can take roughly 30-35 years to pay off, it’s vital to have peace of mind that you are genuinely ready for the life-long investment.