5 Signs You’re Financially Ready to Buy a House. Does the thought of being able to buy a house fill you with excitement?
Buying a home is a big step in anyone’s life. While the process is exciting, it is also a big financial commitment, and it is important to make sure you are really ready for it.
If you’re looking for answers to questions like what is the right credit score to buy a house and how much money do I need for a down payment, you’ve come to the right place.
Read on to discover five signs you are financially ready to take the plunge and buy a house.
You Have a Secure Job and Stable Income
It sounds obvious, but the first thing to consider when deciding if you are financially ready to buy a house is whether you have a stable income.
You need to be able to show lenders that you have a history of steady employment. Buying a house is a long-term financial commitment, so you need to be sure that you will have the income to support mortgage payments for many years to come.
You Have a Good Credit Score
When it comes to buying a house, you will need a good credit history to get a home loan. According to FICO, a good credit score is 700, but a score of 740 or above will get you the best rates.
This is because lenders want to see that you are reliable and able to manage monthly debt payments.
Improve your credit score by paying monthly debts on time and using your credit wisely. If you don’t yet have much credit history, a low-limit credit card or small loan is a good place to start building your score today.
You Have Enough Money for the Down Payment
In the process of buying a house, the biggest up-front cost is the down payment. Prospective homebuyers will need to save anywhere between 3% to 20% of the purchase price.
This means a lot of savings are needed before you can seriously consider buying a home. You must also remember to factor in things like whether the house needs any repairs or renovations, or whether you need to buy expensive appliances.
If you have enough money saved, then you might be ready to buy.
You Are Planning on Staying in the Area
Buying is only cheaper than renting if you stay put for three years. The cost of buying and selling a house is high, so only consider buying a house if you are planning on settling down for at least this amount of time.
Buying a house is an investment, but only if you add value to the house or give it enough time for house prices to rise.
You Have an Emergency Fund
The beauty of renting is that if your washing machine breaks, you just have to ring your landlord and they will arrange and pay for it to be fixed or replaced.
If you own your own house, that responsibility falls to you. Even if you can afford to buy a house and pay the mortgage, you still need enough money for when things go wrong.
How to Know You’re Ready to Buy a House
If you answered yes to these five things, you may be ready to take the first step on the road to buying a house. To be in the position to buy a house is a huge financial achievement, so you should be very proud.
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