Buying a home can be tricky and confusing if you’re not sure about it. Not only are there tons of ways that things can go wrong, but if you’re not prepared for it, you might be taking off a lot more than you can handle.
If you’re considering buying a house and want to make sure you make the right choices: these are three signs you’re ready to buy your first home and three things that could set you back.
Are you ready to buy your first home?
Yes: Your Credit Score is High
The lowest your credit score can be to be approved by a lender these days is usually 650, but that comes with a steep interest rate that can feel hard to get past. If you can get your credit score up to the mid-700s or 800s, you’ll quickly see how much lower an interest rate can go. This can save you tens of thousands of dollars in the long run.
No: You Want to Move Again Within Five Years
Moving can be thrilling, but if you think you’ll want to move again within five years, now isn’t the time to buy a house. You usually don’t make any money back on your investment until after the five-year mark, with the only sizable amount finally adding up by around year ten. If you think you’ll want to move before then, homeownership isn’t for you yet.
Yes: You Have a Stable Job
One of the earliest steps to buying a house is to prove that you have a stable income and are able to keep a job. Although a large number of people were laid off in 2020, if you had a good job history before and after that, you should be fine! Show that you are able to keep a job and that you’re a hard worker so that your lender won’t be worried about receiving payments.
No: You Want to Change Careers Soon
A career change can be fantastic: but it can also set you up for a lot of financial uncertainty and strife. Although you should be able to work a job you love, if you don’t have stable work yet, don’t buy a home.
Yes: You’re Married With Two Incomes
Are you happily married in a two-income home? If so, you might be ready! Not only is it easier to afford a property with two incomes, but it also ensures that if one of you loses your job, there’s the other as a safety net to allow you to continue to make house payments.
No: You’re Considering a Divorce
Nobody should be stuck in a marriage that makes them unhappy, and buying a house to try to fix a relationship isn’t a good idea. If you’re considering a divorce, it’s not the right time to buy a house, especially if you don’t know if you’d be able to handle the house payments on your own.
You Deserve to Have Everything Aligned Before You Buy
Although there’s never going to be a 100% perfect moment to buy, you deserve to have your life in order before you make this massive financial decision. Consider looking for these signs before you buy.