Buying a house is a large step to take towards financial freedom and comfort. Of course, we all want to make a space for ourselves and carve a path towards retirement, but that can be hard to do when you’re unsure about timing.
Is there a right moment to buy a home? How prepared should you be for this next step? These are some of the top things to think about when you’re getting ready to take that plunge, and why thinking it through carefully matters.
Your Credit Score Is Above 700
How high is your credit score? If you’re sitting in the mid-600s, you’re right on the national average. But, unfortunately, any score below 700 can drastically increase the interest rates you’ll have to pay on a home loan.
These interest rates can leave you spending tens to hundreds of thousands of dollars more than you would have otherwise and are something to be careful about. If your credit score isn’t up there yet, take the time to pay off any debt and build up to a score that will offer you a better chance at financial security.
You Have a Great Work History and Income
If you’ve worked for the same company for over five years, and they’ve paid you well enough that you can afford all of the expenses that come with a home: it might be time to buy!
Not only is the house payment a monthly occurrence, but you’ll also have to deal with the expense of homeowners’ insurance, HOA fees, property taxes, and home maintenance. These add up to a lot of money spent every month that you don’t have to dish out if you’re renting.
You’ve Created Healthy Financial Behavior.
Do you have sizable savings built up? If not, how much money can you work to put away every month?
People living paycheck to paycheck aren’t going to look appetizing to a lender as someone who’s put away money and showed that they could budget and spend intelligently. It can take time to build up these skills, but if you put in the effort to build savings, you will see a payoff when it’s time to buy.
You’re Outgrowing the Use of Renting
Many look to buy when they realize they’re outgrowing apartment living or that they want more space so that they can start putting down roots. Although ‘putting down roots’ isn’t one of the major steps to buy a house, realizing that you want a permanent residence can show that you’re emotionally ready to buy.
Some buyers purchase properties on a whim and then realize within a couple of years that buying this home doesn’t fit in with their goals or needs in life. Feeling ready to settle down and commit to a property for the next ten to twenty years is a big step.
There’s no singular sign in life that will tell you it’s time to buy, but looking out for all of the tiny signs can make it so that you’re financially and emotionally prepared to make a purchase.