Article content courtesy of OpenListings
“Am I ready to buy a house, or should I just keep renting?”
It’s one of the most common questions among renters and one which first-time homebuyers often spend months (if not years) trying to answer.
Here are the four tell-tale signs that you’re ready to take the leap into homeownership.
Sign #1: You’re ready to settle down
In order for your purchase to make financial sense, you’ll want to plan on staying put for at least five years.
Answer the following questions:
- Can you see yourself staying at your job for that long or will you be looking for new opportunities?
- If the right position came along, would you be willing to move for it?
- Do you like the area you’re living in or would you like to explore other options?
- Do you see your living situation changing soon?
- Are you planning on moving in with a significant other or expanding your family?
If these questions make you squirmy, five years ahead feels too distant to consider, or you still want to see where life life takes you, then you may want to consider renting for a bit longer.
Sign #2: You’re done living paycheck-to-paycheck
Let’s face it – becoming a homeowner is expensive!
Prospective home-buyers need to be prepared to come up with a sizable down payment, earnest deposit, and closing costs but they may also need to pay for time off market fee, inspections, and/or appraisal – especially in a competitive market.
Luckily, there is a way that you can prepare for the added financial pressure before the big day comes and understand how much house you can afford. Use a mortgage calculator to estimate an affordable monthly payment based on the type of home you’re looking to buy. Then, subtract the amount you pay in rent each month, and aim to put the remainder into savings. Start by working towards an emergency fund and then move onto a down payment that could be worth 3%-10% of the home’s sale price.
Don’t forget to consult with a reputable lender and discuss the loan process, requirements, and costs.
Sign #3: You’re ready for more responsibility
Once you find a home and actually buy it, that’s really where all the fun begins. Yes, owning a home means that you have a lot more freedom to improve the property as you see fit — whether that means putting in an entirely new kitchen or redoing the hardwood floors.
However, with that added freedom comes a layer of responsibility: not only do you shoulder the monthly obligations such as the mortgage, utilities, property taxes, homeowners insurance, and (if applicable) HOA fees, but you also have regular maintenance, home improvement, and repairs.
Think about what you’re like as a tenant now. Are you willing to roll up your sleeves and help with small tasks or are you relieved to know that you have someone to call? If you’re less handy, you may want to take some time to familiarize yourself with common home maintenance tasks before committing to buying anything. It always helps to have a fair idea of what you’re getting into.
Sign #4: You know what you’re looking for
Though it may seem unnecessary to explain, when you’re trying to determine whether or not you’re ready to buy a home, it’s useful to have an idea of what you’re looking for but you shouldn’t have every detail set in stone. In fact, it’s preferable if you have some flexibility in your home search. That said, having a basic set of parameters in mind will make the home search go smoother.
Consider the most important factors that you absolutely must have in a home. These will be the things that cannot be easily changed after you move in (as well as things you would not feel comfortable living without) such as the location, the number of bedrooms and bathrooms, the sale price, or any specific features like a perfect picture view or mature landscaping.