It might seem like a tough decision to buy your first house but there are some major signs that you’re ready. If you’ve ever considered the idea, have a steady job, and have been saving money for at least two years then maybe it’s time to buy! Below are the 6 signs you’re ready to buy your first home. Make sure to also check out our blog on financial tips for buying your first home.
You should feel empowered about making this decision for yourself and not worry about what other people say.
You Have a Good Credit Score
To buy your first house you need to have a good credit score. The best type of credit is a FICO score because it takes into account more data points in determining your risk in borrowing money. All lenders use FICO scores to determine the way they will charge you or offer you insurance on your loan. Typically, your credit score should be 730 or above to be considered “good.” An impressive credit score will make it easier to get a loan and get qualified for a better interest rate.
You Have Little or No Debt
You should have at least a year of “no debt” before buying a house. There are some exceptions to this rule but you should still try to clear your debts before you buy a house. This is because the mortgage is going to be on your credit report for up to 10 years, so it’s in your best interest to avoid any negative marks on your credit report as soon as possible. You should not buy a house if your debt-to-income ratio is more than 35%.
You Have a Stable Job
In order to buy a house, you must have a stable job. A stable job can be considered any full-time job you’ve been at for at least two years. The longer you’ve been at your job, the more lenders will view it as stable. They look at this before approving any mortgage loans to ensure you are able to make the payments.
You Set Up an Emergency Fund for Yourself
When you buy your first house you should have a minimum of three months of living expenses set aside at all times. This will make sure you can pay the rent or mortgage if you lose your job or have an unexpected expense.
You Plan to Stay in the Area
Buying a new home should be looked at as a long-term investment. If you have any desire to move within the next 3 or so years, you are not ready to buy a house. It is best to stay put if you can, especially if you can get a better interest rate on a home that is in the same neighborhood. The longer you stay, the more your investment will pay off.
You Understand the Process
The most important part of this process is that you have done your research and understand what goes into buying a home. Once you understand all of that and still feel ready, then you will know it’s time.
If you feel like you fit most or all of the 6 signs you’re ready to buy your first home, it’s time to take the next step!