Homeownership is an important part of American prosperity.
It provides secure, consistent housing and, because a mortgage payments become real ownership, acts as a forced savings account. It allows you to take pride in your property and lets you change, improve, and use the home as you see fit. For these reasons and more, people are often told that homeownership needs to happen; the sooner the better!
But it’s not always the right time to purchase. There are, in fact, just as many reasons not to buy as there are to buy. So how can you possibly know if the time is right?
While every decision needs to be based on personal circumstances, there are signs that indicate it’s time for you to jump into the rewarding world of homeownership!
Are You Ready to Buy a Home? 12 Signs that the Time is Right
1. Your Debt Load is Manageable
Because it’s connected to many other factors, this is possibly the single most important sign. If you have a significant amount of consumer debt, you are likely going to struggle with making payments on a high-quality home. How much debt is too much debt? That all depends on your income and the lender, but you should avoid having monthly payments that approach 50% of your income.
2. You Have Enough for at Least a Small Down Payment…
There is a myth that you need at least 20% down to purchase a home. This is, quite frankly, false. But having a down payment is helpful, as it will reduce the total you borrow for the home. This factor does have flexibility, however, as there are some options for 100% financing, but bringing a down payment is always helpful.
3. …Plus a Little Something for Emergency Expenses
If you move into a new home and the heater breaks down, can you pay for it? What if the garage door, garbage disposal, or dish washer stop working? Having at least a small emergency fund will take some of the stress out of moving to a new home.
4. Your Credit Score is Decent
You may not need fantastic credit to get a mortgage loan, but having a quality score can be extremely beneficial. Your score will determine the availability of loans, as well as terms such as interest rates. If your score is extremely low, you may want to consider pausing homeownership and focusing on improving your financial stability and organization.
5. You Have Money at the End of the Month
This is tied to debt load, but there are other issues that can cause your monthly income to shrink. If you find that your finances are stretched, it may be difficult to make a mortgage payment, but if you have money to spare at the end of every month, you could likely afford a mortgage loan.
6. A Mortgage Payment Would Be Significantly Less Than Your Rent
In some cases, a monthly mortgage bill will be more costly than paying rent. But that’s not always the case. If you are writing a massive rent check every month, it may be time to consider purchasing a home (or moving to a different rental) to reduce your monthly costs.
7. You’re Sick of Living in Someone Else’s Property
Not everything in life is dollars and cents. Quite frankly, it just feels better to live in a home that you own. If you want to paint the walls, you can; if you want to build a deck, you can; if you want to turn the basement into a sports bar, you can! Just knowing that you can do with the house as you please, because it’s your house, can be priceless.
8. You’ve Been at Your Job a While, and You Don’t Plan on Leaving
Leaving your job creates statistical risk for lenders, but if you have been at your job for a while and have no plans to leave, it’s a sign that homeownership would be appropriate. On the contrast, if you expect (or hope) to leave your job soon, you may want to delay a home purchase.
9. You Know Where You’ll Live for at Least Five Years
If you plan on staying in your city or area for the next five years or more, it indicates that home ownership will be right for you. If you are happy in your city, your job, and your social life, then why not settle into a home of your own and take advantage of the stability brought by home ownership?
10. You Live in a Buyer’s Market
When there are many properties available and fewer buyers, you will have an advantage. If a seller is struggling to move a house, they will be more open to negotiated prices, which means you could get a wonderful home for a discount. However, if the market is extremely hot, with few properties and quick sales, you may end up over paying.
11. Interest Rates are Expected to Rise
Some will say that you MUST purchase before interest rates rise. This is simply not true; it’s far more important to have your financial situation in order, regardless of interest rates. However, if you are ready and interest rates will soon be rising, it might indicate that you need to enter the market soon, before the low rates disappear.
12. You Don’t Expect Major Expenses in the Next Few Years
This can be extremely difficult to predict, but if you can reasonably expect to have no major expenses in the next few years, it might give an indication that purchasing is right. Will you need to buy a new car soon? Are you getting married? Will you have newborn children? Will you be purchasing a business? If you expect one of more of these situations, you may want to wait. But if you don’t, perhaps it’s time to buy!
Let Us Guide You to the Right Mortgage
If the time is right for you, contact San Diego Purchase Loans to learn more about available mortgages. We’ll use a common-sense approach to lending approval so you have the best chance at getting the most affordable loan with the right terms for your need
