You are finally in a financially stable position in life and are contemplating investing in real estate. There may be some doubts about you being completely prepared for such a huge responsibility. This type of investment can be scary, and you may be unsure whether you are ready to buy your first home. Consider putting all your thoughts on paper, talking to your friends, and looking up advice online. We also have some ideas for reaching your conclusion, so watch for these seven signs.
Your Income Is Stable
This is an easy guess for one of the reasons you need to look out for. Working as a freelancer with an irregular income can be very unstable. If that is your case, you may want to wait until you get a full-time job. On the other hand, if you have had your job for several years and have no reason to think you will leave this company any time soon—you are golden. Your income also needs to be of a specific range in order to be eligible for a mortgage loan, so ensure to take that into account.
You Have No Plans to Move in the Near Future
Once you invest in property, it is not as easy to simply pick up and move to a different place. You will still need to pay off your mortgage, and unless you are swimming in it, that may be too much to bear. You could always try to find a buyer to take over for you; however, this is typically quite a challenge. Owning your home short-term is also tricky for a few reasons:
- Property values may not rise enough to cover transaction costs if you are only a short-term owner
- If you sell your home within less than two years, you may have to pay capital gains tax
Make sure you are ready to buy your first home before making this decision. Evaluate your living and financial situation and ensure a move is not in the plans on your end.
You Are Ready to Buy Your First Home If You Are Ready for the Responsibility
Being a homeowner is no walk in the park. You need to know that you can handle all the responsibilities that come with it. In addition to paying the bills, you will need to take care of loads of maintenance tasks. These could include cleaning the gutters, mowing the lawn, doing pool maintenance, and many more. You will also need to do repairs regularly. This requires some skills or the money to hire a professional whenever things go wrong.
You Are Starting a Family
What better reason to invest in real estate than starting a family? Naturally, you will still need a solid credit score and the finances to do it. But keep in mind that the apartment you may have been renting for years might not have enough space for all the new members.
Get Help Once You Buy Your First Home
There is nothing better than to have a helping hand when moving into your new home. Family and friends can be there for you and show their support. However, hiring movers is the best idea if you are moving for the first time. They can take care of all the packing, heavy lifting, and transportation for you. This way, the move itself will be a much more rewarding experience.
You Do Not Want to Pay Rent Anymore
Renting property makes sense in many ways. You do not need to worry about the upkeep or any maintenance. You simply call your landlord whenever issues arise, and they sort them out. This may be a great short-term solution, but you might resent it after some time. Knowing that you are investing money into something that is not sustainable can wear you down. Once you are a homeowner, many benefits will come your way. For instance, you will be building equity which you can borrow against in the future.
You Have a Great Credit Score
Your credit score denotes your reliability and whether you are a credible candidate for such a loan. They can see how well you manage your finances and determine whether you can make monthly payments.
An above-average credit score increases your chances of being approved for a house loan. Before you decide on investing in your first home, ensure that you do not have any skeletons in your closet and that you have accumulated a solid credit score.
How’s Your Debt?
Having a lot of debt can significantly lower your chances of getting a home loan. Your debt will be taken into account when considering financing. In addition to that, a large debt may reduce your ability to make your mortgage payments regularly. In turn, this will cause you a ton of stress, and it may not be worth it.
You Have Saved Up for a Down Payment
Typically, homeowners will make a profit from selling their existing home, which will help them invest in the down payment of the new home. When you are a first-time buyer, you do not have that privilege. You need to ensure that you have saved up enough not to have to worry about this step. Depending on the type of loan you get, you are looking at up to twenty percent for the down payment. Take your time to do thorough research on loan options before you make a commitment. This step can make or break your decision to invest in your first home.
Are You Ready to Buy Your First Home?
As with any decision, weighing your pros and cons is vital. There may be many signs that you are ready to buy your first home, but the most important one is your gut feeling. After you have ticked all the boxes any financial adviser would give you, take a breath. Think of all the irrational fears and wants and try to see what works best for you and your family.