Am I ready to buy a home? 7 questions to help you decide!

Undoubtedly, buying your first home is one of the most important and the largest financial decisions you will ever make. But how do you know if you’re ready for it? There are plenty of good reasons to own a roof over your head, but there are many trade-offs as well. With the added control comes a laundry list of responsibilities. And with the opportunity to build equity comes the risk of losing money.

Taking the time to answer a few questions will help you decide if you’re truly ready for the big move. Here are some questions to consider asking yourself before taking the plunge.

1. Do you have money for a down payment?

Your down payment on your first home will most likely be the single largest investment you will ever make in one go. As a rule of thumb, first-time homebuyers must have at least a 20% down payment to purchase a home. It’s always a good move to put down as much money as possible in the beginning so you can avoid a monthly mortgage that follows you around forever.

2. Do you have a dependable saving and emergency fund?

While we’re on the topic of money, it’s important to mention that saving up for the down payment isn’t enough. Buying a home will involve extra costs like interior costs, legal fees and the cost of getting any repair and maintenance done to make the home liveable. This is when additional savings will come in handy.

It is advised that you have some emergency funds set aside. When you rent a house, you have the luxury of calling up your landlord whenever there are issues with the property. But once you become a homeowner, you’re responsible for everything. So, you need to have a larger safety net before you buy a house to take care of future costs.

3. Do you have a handle on your debt?

Fortunately, you don’t have to be entirely debt-free to buy a house. Because of car payments, bills, and other recurring expenses, most mortgage companies don’t expect borrowers to be totally debt-free.

However, they do want to know if you’ll be able to afford your mortgage payment. This calculation is done based on how much money you earn versus what you need to spend on other debts. It is a good idea to look at your debt-to-income ratio to understand if you’ll qualify for the mortgage

4. Are you sure you can afford the monthly expenses?

You can use an online mortgage calculator to determine the amount that you will need to pay every month. If you’re moving from a rented property then for obvious reasons you wouldn’t want the monthly payment to be too far away from what you were paying as rent. The good news is that the amount can be similar.

But there are many additional costs of homeownership that newbie buyers tend to overlook, for example, homeowner association fees. So be cautious about simply using an online mortgage calculator and instead research and figure out the additional pay outs that you will have to make towards your home every month; the mortgage payment is just one piece of the puzzle.

5. Do you have a steady income?

Stable employment and regular income are not only essential for being able to pay your monthly loan instalments, but also important indicators for qualifying for any loan. Demonstrating financial stability on paper shouldn’t be the sole reason you go ahead with this decision. You should only buy a home if you believe your income will remain steady for the foreseeable future. Therefore, if there’s any uncertainty about your income or employment, it’s a good idea to wait until everything settles down before buying a home.

6. Do you need more space?

While money is for sure a critical consideration, there are many other factors to think about when asking yourself if you’re ready to become a homeowner. One of these is the thing we all seem to need more of lately– space.

Maybe you desperately need a designated home office or an extra room for a home gym. You may want a larger backyard or an area to fulfil your lifelong dream of starting a garden. Maybe you need more room for the baby that’s coming soon. If this sounds like you, then now may be the time to consider buying a home.

7. Are you planning on staying put for a while?

There’s no hard and fast rule about moving shortly after buying a home. But as a homeowner, you’ll have a chance to build equity. The longer you stay in your home and pay down the mortgage month after month, the more equity you’ll gain if its value stays the same or rises over time. And the more money you’re likely to make when you sell it.

Ideally, you should stay put in your house long enough to make a profit; that’s around 5 years for most. So, if you can’t commit to that length of time yet, it’s okay to continue renting until you’re ready to put down roots.

Bottom Line

Owning a home comes with a host of responsibilities. So, it’s a bad idea to buy a home because of social pressure or because everyone else in your circle is buying one. It must make financial sense to you to become a homeowner.

Have you gone through our little quiz and passed with flying colours? If yes then we might just have your dream home ready for you at Sterling. Come over to www.sterlingdevelopers.com and check out our fabulous ready to move in residential offerings.