How to Know You’re Ready to Buy a House

October 25, 2022

 

Many benefits can be associated with renting properties, such as not having to take care of maintenance and repairs and not having mortgage payments to cover each week. However, there may come a time when you wonder whether you’re ready for homeownership and the many joys that come with it. Not everyone knows when the right time is or even if they’re ready to take that monumental next step. If you can relate to these situations, you might be more ready than you think.

You Have a Suitable Down Payment

You might be ready to buy a house in Columbus, Ohio, or elsewhere in the United States if you have enough money to put down as a down payment on a new home. The down payment figure can depend on the home loan you’re signing up for and the price of the house you intend to buy. The average down payment on a house in the United States is 7% for first-time buyers and 17% for those who have previously purchased homes, while the benchmark deposit percentage is 20%.

Your Credit Score Is Excellent

You might not give your credit score much thought when renting properties, but it can affect your ability to secure a mortgage through banks and many non-bank lenders. Lenders can see you as a high-risk borrower if you have a history of late payments and debts.

While you might be eligible for home loans through some lenders with poor credit, the interest rates can be much higher. Sometimes, it can be worth requesting a copy of your credit report and working hard to increase your score before applying. However, if you have a healthy credit score of 620 or higher, you might be ready to take that next step into homeownership.

You Have Manageable Debt Levels

A mortgage can be a significant and long-term debt to take on. People who carry too much debt can have a high debt-to-income ratio, which means they have too many current financial obligations for lenders to believe they could service a mortgage. However, if you have few or no debts and your DTI ratio is lower than 43%, lenders might have no qualms about lending money for a property purchase.

You Have a Stable Lifestyle

Some people choose not to purchase homes because they move around for work or have other life obligations. However, if you have a stable job, stable income, and overall stable lifestyle, homeownership might start to appeal. You might be more than ready when you’re happy with where you live and could see yourself being satisfied living in your town or city for many years to come.

You Can Budget for All Homeowner-Related Costs

There can be many costs associated with homeownership, above and beyond monthly mortgage payments. Property taxes, homeowner insurance, private mortgage insurance, utilities, and maintenance, are just a few of the many expenses you’ll likely encounter each year. If you have few debts, manageable mortgage repayments, and a steady job, there might be no reason why you can’t have money left over to cover those expenses.

Deciding to purchase a home can be a significant decision to make, and it shouldn’t be a decision you make on a whim. However, if you can relate to these situations above, now might be the right time to explore your homeownership options.

 

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