Have you been asking yourself, “Should I rent or buy?” Buying your first home is a huge step that can provide stability, peace of mind and, best of all, freedom from renting. But it can also be a disaster if you’re not ready for it. Here’s how you know you’re in a good position to buy your first home.
1. You’re free from debt
A mortgage is probably the biggest debt you’ll ever take on, and it can be too much to handle if you’re already struggling. If your student loans are paid off, your car is paid for, and you’ve eliminated any outstanding credit card debt, you will be better able to direct your income toward your new home and all the expenses that come with it.
2. You’ve saved a down payment
The days of buying a home without putting money down are long gone, and that’s a good thing. It forces buyers, sellers and lenders alike to be more responsible. Before buying a home, know that you’ll need to have at least 10 percent of the total cost for a down payment, and having 15 or 20 percent is even better.
3. You have good credit
Do you know your credit score? It’s probably the most important number that potential lenders will use to determine how much they will lend you and what the terms will be. The better your credit score, the lower your interest rates are likely to be. If you have less-than-stellar credit, it’s worthwhile to take the time to repair your credit rating before you think about buying a house.
4. You’re ready to settle down
A house is a long-term investment (mortgages traditionally last for 30 years), and you might regret taking the leap to homeownership if you’re not planning on putting down roots for the long haul. Ask yourself if you’re prepared to live, work and raise a family in your new community for many years to come.
5. Your income is steady
Job security is big when it comes to securing a loan. Many lenders will check to see if you’ve been at the same job for two years or more. They will take that as a sign of financial stability. If you’re moving to a new area to start a new job, make sure it’s a long-term position before committing to buying a home.
6. You have a solid nest egg
The last thing you want is to find yourself “house-poor.” After all, why own a home if you can’t afford to enjoy it? And that’s to say nothing of the added expenses associated with homeownership. They will inevitably appear down the road, including long-term repairs and maintenance. If putting a down payment on a house would wipe out your savings, you’re probably not ready yet.
7. You know what you want
Buying a home is not for the fickle or indecisive. You have to have a good understanding of your goals, needs and wants. That includes everything from knowing what type of home you want (size, style, amenities, number of bedrooms) to knowing what state, city and neighborhood you want to live in for the foreseeable future.
At MileStone Community Builders, we’re here to help you along on your road to homeownership. Of course, that includes making sure the time is right to take the plunge. If your answer to the question “Should I rent or buy?” is to buy, check out our home buying guide and then contact us today to find your Austin, Texas, dream home.