Buying a home will most likely be one of the largest financial decisions you will make in your lifetime, but it is an investment that millions of people have made and will continue to make. Buying a home requires you to be financially stable, and to have the ability to recover if an unforeseen expense occurs. In this guide, we discuss signs that indicate it might be the right time to buy a house. For more insight on making smarter financial decisions, visit MoneyGeek to utilize their wealth of tools and knowledge.
#1. You are out of debt
Getting out of debt is a great feeling, and can free up your cash so you can start saving. Once you have saved up enough, buying a home becomes a perfectly viable option. The money you save from being out of debt can now be put towards your mortgage and other homeowners expenses like property tax, insurance, and home renovation. Just be sure that your credit is in check, as this will help determine how high/low the interest rate on your will be.
#2. You are handy with home renovation
When buying a home, home renovation is one of the largest costs outside of your mortgage. You may be tempted to buy a house that has a low asking price, but this may be because the house has major problems internally. While this type of work can be done, hiring a plumber, electrician, or other professional handymen can hike up costs quickly. Being able to do the work yourself is a great asset, and will end up saving you a ton of money. Even if you are not the handiest of people, small renovations like painting your house or applying trim can be learned through Youtube videos fairly easily.
#3. You are settled down
If you are young and switching job opportunities frequently, buying a home may not be for you. Home ownership is a commitment and requires a great deal of attention. With most traditional mortgages being thirty years, a house is meant to be a long term investment. Wait until you have an established career, and plan on living in your city for an extended period. Most experts agree that you should expect to live in a neighborhood for at least five years if you are considering purchasing a home.
#4. You have decent credit
You do not have to have perfect credit to be qualified for a mortgage, but the higher your credit score, the lower your interest rate will be. if your credit score is at least 630 your chances of getting approved for a mortgage loan are much higher. If your score is at least 580 you may qualify for an FHA Loan with a 3.5% down payment. With this being said, mortgage lenders don’t just look at your credit score. If you have made payments without missing for at least a year, your chances of being approved rise significantly.
#5. You are simply tired of renting
Having to pay someone else’s mortgage every month can be financially and mentally exhausting. Some people make the decision to buy a home simply because they don’t like paying rent, and the mortgage payments may even be lower than what they currently pay for rent. With this being said, remember, payments on your mortgage are not the only costs associated with homeownership.
Related: Rent Or Own? Which Makes More Sense For You?
#6. You want the freedom that comes with homeownership
A lot of people that rent properties would like to change something about their home or apartment, but can’t. Some rental properties even come fully furnished and specify that you are not allowed to change the furnishings. Most landlords will not allow the tenant to make changes to their property, and it can be frustrating. You don’t like the color of your home? When you buy a house, you can paint it any color you wish.
#7. You have kids
Most people want to live out their “white picket fence” dream by buying a house of their own, and raising a family. When raising a family in a rental property, it just doesn’t quite feel like home. Kids are also prone to breaking things within the home, and a landlord will bill you heavily for damages.
#8. You found a neighborhood that you love
Finding the right neighborhood can be a great reason to purchase a home if you have the financial means to do so. Getting along with your neighbors and feeling a sense of community can do wonders for you mentally, and makes for an all around better quality of life. If you have questions about where to live, you can read reviews to find out what people have to say about a particular neighborhood before you decide to purchase a home.
#9. You got a promotion
If you get a promotion and have more income to work with, it may be time to consider buying a house. Assuming this promotion does not involve relocating to a different city, the extra income you receive can be put towards mortgage payments. You are already used to living on your current budget, so why not put that extra cash towards a worthwhile investment?
#10. You have received a large lump sum of cash
Whether you have made a large sum of money from selling a business, an inheritance, or some other means, investing your money in an asset is a wise financial decision. When you receive a large amount of cash, your first instinct is to go out and buy that flashy car or some other luxury item. While these luxury items might look nice, they depreciate in value. Excluding a housing crisis or other freak circumstance, homes maintain most of their value and can even appreciate in value depending on several factors. A large amount of cash at once is (most likely) not something that you receive every day, so using this opportunity to make a sizeable down payment will require less time to pay off your mortgage, and less interest gained.
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Sammamish Mortgage is a local lending firm serving the broader Pacific Northwest region including Washington state, Idaho, Colorado, and Oregon. We are proud to offer a wide variety of mortgage programs and products with flexible qualification criteria. Please contact us if you have any questions or are ready to apply for a home loan.
