Most people know they’d like to own a home eventually. That aspiration is certainly admirable, but in our experience, it often leads to a whole other set of questions. Such as: How do you know when is the right time to become a homeowner? Conversely, how do you know if homeownership is right for you after all?
We hate to break it to you, but only you can know for sure. However, in an effort to make you decision a little simpler, we’ve compiled a few factors to take under consideration.
Consider the factors below before you start searching for your dream home. Maybe you’ll find that you’re ready to buy or maybe you’ll feel that an apartment might be a better fit for you right now. Regardless of the final outcome, you’ll be able to have confidence in your decision and enjoy some all-too-rare peace of mind.
Consider the pros and cons of owning a home before you make any lasting decisions. Image Via:Sundeleaf Painting
Why Do You Want To Buy?
The best realtors always make sure to ask their clients, “Why now? Why is it that you are ready to delve into homeownership at this exact moment as opposed to last year or six months from now?” While there is no true correct answer to this question, it does tell agents a lot about their clients.
People who are ready to buy usually come across the answer easily It might be because they’ve fallen in love with their new area or because they are ready to start growing a family. But, whatever the reason, they’ve clearly put a lot of thought into this decision and weighed the pros and cons before taking the next step in contacting an agent.
Other clients need to search for a reason. When they do decide on an answer because rent is costing them too much money or because more and more of their friends seem to be taking the plunge. While these reasons aren’t necessarily deal breakers, they serve as read flags that a buyer may get cold feet when it’s actually time to sign an agreement of sale.
Before you get entrenched in the buying process, sit back and think about your reasons for buying. Focus on why you’re ready to take the plunge now rather than later. Be honest with yourself, even if your reasons seem shallow, and don’t hesitate to put them down on paper. Doing so can help you focus in on what’s really important to you.
Ask yourself why entering the market now is important to you. Image Via: Dame Architecture Inc.
You Are Unafraid To Commit:
Buying a home is a huge commitment. After all, once you sign the deed, you own your home and are responsible for seeing it through good times and bad. Successful homeowners often have had experience with smaller commitments such as these:
- Location: Have you lived in the same area for quite some time? Could you see yourself living there for the next five years or are you the type of person who would jump at the chance to spend a year in a different part of the country?
- Stable Employment: Are you happy with your employer or ready to move onto the next step? Mortgage companies like buyers to have at least two years experience at their current job.
- Rental History: Do you have a verifiable rental history? Are you used to budgeting and paying rent on time? Banks are more likely to give you a large loan for your mortgage if you have proven experience paying back smaller ones.
Of course, nothing is set in stone and everyone’s circumstances could change at any time. If that happens you can sell your home before moving on to the next step. However, you shouldn’t go in with that plan in mind. Market values can fluctuate and no one can give you a guarantee on how long it will take to find the right buyers. Trust us, it’s best to make sure that you can see yourself in a home for the foreseeable future before sitting down at the settlement table.
Test your ability to commit on a smaller scale before jumping into homeownership. Image Via: Polhemus Savery DaSilva
You’re Financially Secure:
Do you know – without looking it up – how much money you make per month? How about how much you spend? How much debt you are carrying and how much money is in your saving account?
If you do know the answers to these questions, congratulations. If not, that’s perfectly fine, but you may want to take the opportunity to find the out before starting your home search. Real estate professionals need to know these numbers before they can close a deal, so it’s in you’re best interest to give them all the information they need upfront.
How do you know how much money is enough? Well, the specific number will depend on your price range, but we’ve compiled a general guide of factors that qualified buyers tend to share:
- A Steady Income: Your income could come from two sources or ten, but most financial institutions want to see that your family has the same amount of money coming in each month. To them, it’s an indicator that you’ll be able to consistently pay a mortgage.
- A Manageable Amount of Debt: Debt is like Goldie Locks. Too much is seen as a risk and so is not having a credit history at all. The ideal buyer will carry some debt – monthly rent, a car payment, and and/or student loans and be able to show a history of making payments on time and above the minimum.
- A Savings Account: Most banks prefer that their clients be able to make a down payment on a home that is 15-20% of the purchase price. You’ll want to have a savings account that reflects that number and still leaves some left over for upfront costs and rainy day emergencies.
If that breakdown doesn’t sound like your financials at all, now might not be the right time for you to buy. But, if you’re on the fence, play with some numbers. Calculate a price rangein which you’d be able to make that 20% down payment, a mortgage payment, and still be able to live comfortably. Then, use listing websites to take a look at a few homes in that range. If you see something you like, go for it! On the other hand, if you find yourself wanting to stretch the absolute maximum, maybe put buying on the back burner until you have a few more resources.
Do your best to only buy as much house as you can afford. Image Via: Bennett Frank McCarthy Architects, Inc.
You Know What You Need:
While you’ll certainly be looking at a variety of homes once you decide to officially enter the real estate market, you’ll be able to make your time spent looking at showings much more valuable if you have an idea of what you need from your home.
As a quick refresher, the things you need from a home are your dealbreakers – those factors that you are absolutely, positively, unwilling to compromise on. For most people, these are things like a home’s distance from work, the number of bedrooms and bathrooms, or the cost of annual property taxes.
Do you know what you need from a new home or at least have a sense? If you find yourself swaying on factors that should be set in stone, it may be worth it to give yourself some time to come to a conclusion. Remember: Once you buy a home, you want to be happy in it for a while.
Be realistic about what you need from a house in order to live contentedly. Image Via: RMT Architects
Deciding on whether or not you’re ready to buy a home is no easy task. It’s something that requires a lot of forethought, discussion, and planning – individually and as a family unit. We know it can get overwhelming, so feel free to use this post as a jumping off point. Whether you decide to get in contact with a real estate agent or to keep searching for the perfect apartment, we’re happy to help you feel secure in your decision.
Homeowners, what made you decide that you were ready to take the next step? Renters, why have you decided to wait? Share your stories with us in the comments.