When Is The Right Time To Buy A House?
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Whether you are looking to buy or invest, there is power in homeownership. Having a deed in your name can bring a sense of pride, but you should not step into that responsibility lightly when trying to buy a house.
Before you talk to a loan originator, sit down with yourself and your budget to evaluate what you can afford as a monthly payment.
If down payment assistance programs are not an option, do you have someone in your corner willing and able to gift funds to you? Will you still be able to leave your bills on auto pay or is it possible a mortgage will cause you to live paycheck to paycheck? Think about this, will you be able to save for emergency repairs? Do you have more debt than you do income?
Oh, yeah – how’s your credit? These are all important questions because lenders will, unfortunately, judge you by most of the answers. Knowing your financial profile inside and out will give you the opportunity to control your savings, leverage the best interest rates, and negotiate a smaller down payment. If you didn’t completely pass out responding to any of those questions you may be ready to purchase a home after all!
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Think about your current budget and expenses for renting versus buying. Will this next big purchase empower you or impair you? If your current bills outweigh your income it may not be the right time to buy a house. This may come as a shock, especially if you have been saving money for a substantial amount of time. The friends and family you asked prior to starting your journey to become a homeowner simply told you to save-save-save and the right time to buy would be when you had enough saved up. Expenses will arise when you least anticipate them. It is impossible to prepare for every curveball thrown your way, so expand your research to include:
Signing a note and mortgage doesn’t have to be a life sentence, but if you cannot enter that financial obligation comfortably you may begin to feel trapped. Owning a home should bring you a sense of achievement without making you feel like you are drowning.
The right time to buy a house is when you are financially ready to tackle repairs, maintenance, a mortgage, and every other bill you may already have without buyer’s remorse. I get it. You want to come home to your own place, where the bills are in your name, and you don’t have to label your groceries. Take advantage of the opportunity to own when you are not uncomfortable looking at your credit score. You would be surprised how many people want to buy a home and have never seen their credit report before.
Pat yourself on the back. You’ve been saving to buy a house, which is great initiative. Now, let me ask you this – will those funds be used towards your down payment, closing costs, or both? Many future homeowners are told they need to save money to buy but are not made aware that the down payment is separate from the closing costs. Then, you may find the perfect house and your loan originator gives you a cost estimate for the cash needed to close. This is the part where your heart palpitations may begin, but it is nothing worth risking the stress over.
To avoid this, align yourself with professionals who educate you every step of the way.
Be very clear with your realtor and your loan originator about what buying a home means to you in general. From there, your goals and current financial health will become clear. No question is a bad question, because as experts they should be honest and forthcoming in their response to guide you. Buying a house can be a sensitive time, so be sure to have the right people in your corner.
Recording your finances will allow you to map out your own financial blueprint. You can then begin to understand where your money goes, what bills you can possibly cut back on, and how to create a step-by-step budget plan to help you save and even pay down debts.
Don’t get blindsided when trying to buy a house. Get acquainted with your credit profile before a lender does. The most affordable way to do that would be to order your free annual credit report. If necessary, credit repair may be within your own grasp with these simple steps.
When it is the right time to buy a home, you’ll need 3-5% of the purchase price saved up to close successfully. If saving is freaking you out, here are a few tips that could help you cut back on spending.
Licensed Florida Real Estate Agent
Debrah is a Licensed Real Estate Sales Associate and Certified REO & Short Sale Specialist with a growing team of successful agents. She educates future first-time homebuyers via her co-created e-course and local events. Her 90% referral business has allowed her to close over $13M in sales transactions.
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