Homeownership isn’t an easy process. But it’s something that naturally must come. With homeownership comes something called debt. Depending on your financial situation, you could be ready to buy a house this year. So if want to find out if you’re financially ready to do that, this is the article for you.
Below we give you the 7 signs that tell you just that. So with all that said, let’s start.
If You’re Free Of Debt
We mentioned earlier that with homeownership comes debt. This is quite possibly the largest debt you could accumulate. That’s because houses don’t come cheap. Before you even think of buying a house, you have to figure out how you financially stand. By that, we simply mean figuring out if you have substantial debt.
Considering that the vast majority of homebuyers don’t have the money to go out and pay for their dream house in cash, you will have to go to the bank and take out a loan. The bank, or possibly other financial institutions, will then take a hard look at your finances. If you’re free of debt, then that’s the first sign you’re financially ready to buy a house.
If You Have A Higher Credit Score
Simply being free of debt doesn’t instantly mean you’ll be given a mortgage loan. Getting rid of debt is one thing, but having a higher credit score is another.
The reason why a credit score is important is that it is one of the first things banks and financial institutions look at when looking at your mortgage loan application. Your credit score history tells plenty about your finances. If your credit score is low, then that means you lack the financial power to take out a mortgage loan.
Plenty of factors play a role in determining your credit score. The most important ones include your payment history, amount of money owed (debt), credit history length, credit, and new credit. The higher the credit score rating, the bigger the chances you’ll be approved for a loan.
If You Have A Stable and Well-Paying Job
While having a job is an absolute must if you want to buy a house, having a stable and well-paying job goes a long way. A well-paying job will help you not only take out a loan to buy a house but also remodel and decorate it. Although this sounds pretty reasonable and straightforward, what does a stable job actually mean in times like these?
The longer you’re in a position or the more years being a business owner can make a lot of difference. If you’ve just not gotten your first job, it won’t matter as much as going into it with 10 years of employment behind your belt. And while exceptions exist and you could very easily lose your job even if you have 10 years of work experience, the fact still remains.
If You Have A Sudden Rise In Income
Extra income is hard to come by; so make it count. For many of you, a sudden rise in income usually means getting a salary raise or performance bonuses. But this can mean a lot when it comes to buying a house.
Whenever buying a house, you’ll quickly realize that plenty of other expenses exist. These include property tax, homeowners’ insurance, repairs, remodeling, etc. That extra income could help cover some of these expenses. And for many homebuyers, a sudden rise in income is the starting point on the road to becoming a homeowner.
If You Have Put Away A Solid Savings Account
Saving is a very important aspect of life. Not only is saving money something that you should do from a very early age, but it can come in handy when the time for buying a house comes.
It makes sense to start saving money by opening a savings account early because you never know when you’re going to need money for an emergency. Also, if you don’t save a portion of your earnings, you will ultimately waste it on things you don’t really need.
Having to rely on your monthly paycheck isn’t very smart financially. But opening a savings account can sometimes be the difference in buying a house.
If You Have Enough Money For A Down Payment
Whenever buying a house, you will be asked to put a down payment. There is plenty of misinformation regarding down payments, but most real estate experts suggest that the amount needed could be anywhere between 10 and 20%. The more money you put for a down payment, the lower your monthly payments will be.
If You Have No Big Financial Plans Planned
Ultimately, a house is the biggest financial purchase you can make. Thus, you’ll need to focus all your attention, money, and energy on making that a possibility. But plenty of people like to plan things ahead. This isn’t anything wrong or bad, but planning other big financial decisions in addition to planning to buy a house is a mistake you have to prevent. Considering that mortgage loans can be quite high and take a large chunk of your salary, it would be unwise to also buy a car at the same time; regardless of how much you need it.
Becoming a homeowner is a joyful thing, but also one that asks you to sacrifice plenty. Luckily for us, we can follow certain signs and make sure we’re financially ready to buy our first home. And we hope that our article helps you do just that.