Signs You're Ready to Buy a Home Now
The idea of having a home is nice. You may imagine the possibilities, the potential, the freedom to make a house your home. But wanting a home, at some point, does not mean you are ready to make this big step. Knowing when to buy a house is critical so you can be confident in your decision, stave off buyer’s remorse, approach the process methodically (so you can close the best deal!).
7 Signs You’re Ready to Buy a Home
When you are ready to buy a home, you’ve gone past the wanting and the “wouldn’t it be nice?” stage. You are either prepared to take action or you have already started the process. Here are seven signs you’re ready to buy a home:
You’re Ready for Roots
No, buying a house does not mean you are chained to it forever - but it is a significant move, and you will have ties to that location and area into the foreseeable future. Typically, a home purchase makes the most sense when the buyer plans on staying in the home for at least five years. A shorter term situation can cost you big bucks. So, before you get your heart set on a cute Cape Cod or an elegant Victorian, ask yourself:
- Am I likely to be at my current job for the next few years?
- If a new opportunity came along in my career, would I be willing to move?
- Is my living situation going to change soon (e.g. moving in with a partner, starting a family, going empty-nester, etc.)?
- Does the area meet my needs in terms of services and amenities?
- Do I like the area?
Yes? Great! If you are not sure of some of your answers, it may not be the right time for you to move ahead. Give it some careful thought.
Your Credit Score Is Strong
A strong credit score does not necessarily indicate that you are ready to buy a home - but it is a good sign! A score in the 700s (or better, 800s), will help you secure a mortgage with other interest rates and associated fees.
How’s your credit? If you are not sure, you can access three free reports a year from the major credit bureaus (Experian, TransUnion, and Equifax). Just visit annualcreditreport.com for yours; they do not have the score, but you will be able to see if there are any debts that have a detrimental impact. Your bank or credit card institution may also offer a free credit score as well.
If your credit is not where it should be, take steps immediately to improve it. You can do it, and the better your financial position, the more ready you are for this big step.
You Have Your Down Payment Squared Away
Conventional wisdom holds that you should put down 20% when you purchase your home. For a $200,000 property, this is $40,000. The 20% guideline will help you secure lower interest rates and lower monthly payments.
Can your down payment be lower? Yes. You can put 10% down, or even 5%. Some people do this when they want to get into a home as soon as possible and start building equity. Keep in mind that your interest rates may be higher, and your monthly payments will certainly be.
You Can Cover Closing Costs
You’ve scraped and saved; you have enough for a downpayment - but don’t forget your closing costs. This includes inspections, appraisals, and a grab bag of other expenses. In the US, the average closing costs are $5749. Can you cover it?
The good news is that you can lower this expense; some banks help out if the buyer uses them for the financing, and some sellers will cover all or a portion.
Down payment: check. Closing costs: check. But what about the refrigerator that stops working just as you move in? The stove you want to upgrade? The furnace that should really have a servicing? The drapes, rugs, couches, and linens that you want to add your own stamp to the house? Make sure you have money saved for these expenses, as well as an emergency fund.
You Are Ready for Responsibility
Owning a house is a lesson in responsibility! When the plumbing acts up at midnight, you can’t call your landlord. When your dishwasher starts sudsing out of control, you are the handyman. If you love learning and completing home projects, improvements, and repairs, and if you are willing to either put in the time or the money, you may just be ready!
You Can’t Imagine Delaying Your Dream Any Longer
You have your finances in order, you’ve been binge-watching HGTV, and you simply cannot wait to fulfill your dream of owning your own home. Ready? We think so!
You’re Ready - But What About Coronavirus?
There is no doubt that the coronavirus threw a wrench into the works and impacted… well, everything. Will it also impact your ability to buy a home? It may. There’s no solid answer that fits everyone. In some locations, real estate agents actually have too many buyers and too few houses! It’s too soon to tell how the market will react to COVID, especially in the longer-term, so it is important to get back to basics.
Ask yourself the same questions: Am I planning on staying in the area for at least five years? Is my job stable and secure? Does this location/neighborhood offer the amenities and services I need?
We have good news: the pandemic has helped drive interest rates down to near-historic lows. There are also programs available to help with downpayment costs. These factors can tip the scales in favor of buying now.
Knowing when to buy a house is critical - but little did we know that we’d have to enter a global pandemic into the equation. But if you have a high level of readiness, this does not need to derail your plans.
Ready to start looking? Visit Homes & Land for terrific listings and all the resources you need to proceed with confidence.