It goes without saying – buying a home is a major decision. Even people who have saved up for years question whether or not it’s the right time to purchase a home, especially in a market where housing prices are record high. And while it can be a confusing and difficult process, buying a home can also be a very exciting time. If you’re on the fence, here are some basic things prospective homebuyers need to consider before buying or building their own home.
You Feel Ready
It may seem like common sense, but listening to your gut is sometimes the best way of realizing whether or not it’s the right time to buy or build your own home. Societal pressures such as getting married or having kids can often override someone’s sense of self-awareness, but it’s crucial to make decisions according to your own comfort. So ask yourself, is this something you want to do because it aligns with your goals or is it something you feel you need to do in order to be accepted by others? If it’s the latter, maybe it’s time to take a step back and try to re-evaluate what your priorities are. I guarantee it will give you a better sense of clarity than following a how-to guidebook on adulthood.
You Are Financially Stable
Again, it’s common knowledge that you should be financially stable before buying or building a home, but you might be surprised to discover the many factors that go into purchasing a home, such as your credit score, job security, and savings.
Do You Have a Good Credit Score?
According to NerdWallet, a credit score of 620 is typically the minimum that mortgage lenders will accept for homebuyers. Sometimes lenders will go as low as 580 or below, but it’s more likely you’ll be approved for a loan if your credit score is between 680 and 740. Paying your bills on time and keeping balances low on credit cards is a great way of raising your credit score.
Is Your Job Secure?
Sure, you may have a really good job with a great salary and benefits, but is it a guarantee that job will last forever or otherwise propel you into the next job if you get laid off unexpectedly? Prospective homeowners need to consider if their consistent source of income will be just that – consistent. Even if you have enough savings, it’s essential to make sure you’ll have a steady income to keep up with monthly home payments.
Do You Have Savings?
People seeking to buy or build a home should have a great deal of savings before finalizing their purchase. Savings are not only necessary for a down payment, but will also act as a safety net to protect buyers and their homes in case of any unforeseen emergencies. Losing your job and natural disasters are some of many circumstances that make savings key before deciding to purchase a home.
Home Ownership Aligns With Your Long Term Goals
Some people dream of traveling the world, while others envision settling down and buying a home near family and friends. Prospective homebuyers should determine if they plan to keep their job long-term and if the location aligns with their vision for the future. Other factors to consider are your current family size, if you plan on having more kids, the type and size of home you will need, and the lifestyle you want to live. If you still have dreams of traveling the world or living in several cities over the next couple years, buying a home is probably not the best decision for right now.
If you’re still interested in buying a home, but feel like you need more information before finalizing your purchase, we recommend reading this article by Bankrate that discusses the home buying process in depth and the Forbes 2019 real estate forecast.