Determining if you’re ready to own a home for the first time can be a challenge!
It can feel intimidating to purchase your first home. How do you know if you’re ready?? There are a few simple questions you can answer to help you determine if buying a home is the right decision for you at this stage in the game – and if you’ll be a good candidate for obtaining a home mortgage loan!
You plan to stay in the area for 5+ years.
A commitment to the area that you’re planning to purchase in is the #1 thing that you should consider when home buying. Whether you’re tied to a job in the area or you’re hoping to stay near family, ties to the area and a firm commitment to not move in less than five years is critical. Because of market fluctuations and the time, it will take you to earn a fair amount of equity in your home, putting it on the market in fewer than five years may cause you to lose money, making this first home purchase a bad investment.
You have significant savings.
One of the things you will likely need to obtain pre-approval for a home mortgage loan is a fairly significant saving. Depending on the market and the type of loan that you’re planning to pursue, you will need anywhere from 2% to 20% of the total home cost saved for a down payment. There are also specific rules regarding how long you have had that money and where you got it – whether it was earned income or a gift. Make sure you have all your bases covered to make purchasing your first home a blessing and not a money pit!
You are able to obtain pre-approval.
The most critical aspect of letting home sellers and REALTORS® know that you’re a serious buyer is providing them with proof of mortgage pre-approval. Calling to get pre-approved for a mortgage does not lock you into borrowing money, so there’s not much downside to giving it a shot. These pre-approvals will be a hard hit on your credit report though, so do so sparingly.
If all these statements apply to you, you are ready to purchase your first home! Happy house hunting!