Buying A Home: Are You Ready?

Buying a home can offer many advantages including tax benefits, financial security and the pride.

Making the decision to buy a house is one of the biggest decisions you will ever make in your life. It's very difficult to know when the time is right, especially if you have been renting for a while. How can you know if you are ready?

There are many factors to consider when deciding if you are ready to buy a home, and you need to examine each of them on a personal level. If you dive in head first and are not prepared, the results can be disastrous. However, if you really do some self-analysis and soul searching, buying a home can be both exciting and rewarding.

Fools Rush Into Buying a Home

There is nothing worse than buyer's remorse, and it will be a thousand times more terrible if it turns out you cannot afford to keep the home you selected. According to the FDIC, 1 out of every 200 homes ends up being foreclosed upon, and you do not want that happening to you.

Some people rush into buying a home and later regret it. The reasons people do this are numerous. Often, young people see their friends or colleagues buying houses and decide that the time is right for them to do so, too.

However, it is important to understand that all people are at different stages in their lives no matter what their age, and what might be the right time for someone else may not be the right time for you.

Others begin looking at houses and make a snap decision to purchase one because the market where they live moves quickly. FOMO (Fear of Missing Out) can be a powerful force, but it is not always a positive one.

Some rush into home buying because of pressure from the realtor or seller. If you are not ready to buy a house, never let yourself feel pressured to buy. Instead, read on to understand the many things you must consider before you can be sure that you are ready to buy a home.

Are You Ready?

If you are asking yourself, "Am I ready to buy a home?" then you came to the right place to find out. This comprehensive list below includes all the questions you should ask yourself and the things you should consider before taking this giant leap of faith in your life. 

You may consider all of these things and you may come to a definitive answer to your questions. Or, you may read through this list and still be unsure. If you feel you are definitely not yet ready, save this list for future use and return to it in a year and try again. If you are still not sure, you are probably not quite ready, and it won't hurt to wait a bit in that case, either.

Is the Timing Right?

It's important to first consider whether or not the time is right. Just because you are not ready now doesn't mean you won't be ready in a few years, so answering no to this question is not a be all and end all to the home purchasing decision.

If now is not the time, it's simply not the time, and you can return to the idea when the time is right. 

Consider the housing market both in your area as well as across the nation overall. Do a lot of reading to discover and understand trends. Follow them for a period to see if now is a good time or if waiting would be in your favor.

Also, it's not a good idea to buy a home if you don't plan to remain in the area for at least three years. Moving in and out of a home, buying it and selling it are all large processes you don't want to have to go through over and over. If you foresee a move in your not-so-distant future, it may be best for you to rent for the time being.

If you have children or plan to have children though, now might be a good time to buy a home for your growing family. Buying a house will help you to lay down roots in an area in preparation for your children's schooling. It will also give you a good foundation for the future of your family, and provide security for all of you together.

Am I Mentally and Emotionally Ready?

Buying a house is a big undertaking from a financial standpoint, but it can be intense mentally and emotionally as well. You may need to take a hard look at yourself and your lifestyle to determine whether or not you are ready. 

If you are sick of renting and want to own property that you can upgrade, remodel and invest in yourself, then you may be ready to take on a home of your own. Consider where you plan to be in your life five or ten years from now. Is home ownership a part of the picture? Is the place you plan to settle the place you are right now?

On the other hand, if you sometimes think about dropping everything and moving abroad, or imagine yourself living in an RV traveling around the USA, you may not be ready to own a house quite yet. If you spend your weekends partying with rowdy friends who may accidentally damage a house owned by you, then now may not be the right time for you either.

Am I Financially Prepared?

In addition to mental and emotional preparedness, you also much be financially prepared to buy a home for the first time. The type of home you will qualify for when it comes to getting a mortgage is tied to your debt-to-income ratio. Normally it is suggested that people shopping for a house keep theirs under 36%. 

You may not be able to afford your dream home. Use an online mortgage calculator to find out how much house you can afford in the state where you live. Don't depend on just one though, the information they provide can sometimes be misleading. 

If you don't have one already, you may want to make a budget to see where all your money is going. This way, you can determine whether you will be able to reallocate some of your money to a mortgage payment if it is larger than your current rent. 

Do I Have Enough Income to Succeed?

Choosing a house that interests you is only the first step. In order to qualify with a lender, you will need a good credit score. If yours is not good, you may want to spend some months or even years working hard on strategies to raise it.

Again, your lender will look at your debt-to-income ratio, so you will want to pay down some of your debts before buying a house. Not only will this help you in home shopping and purchasing, but it will also give you more peace of mind once the mortgage payments start rolling in.

You'll also need to use a large portion of your savings on the down payment. Although you can buy a house with a relatively small down payment these days, the smaller this initial investment, the more you will be paying in payments moving forward. Experts suggest that new home buyers seek to put down around 20% of the overall home cost if possible.

Is This Decision Financially Sustainable for Me?

Once you close on your new house, you have already spent much of your savings on a down-payment and you have signed on for long term payments over many years ahead. However, at this point, it is vital that you realize that you are not done spending. 

There are still many additional, ongoing costs for which you will be responsible. Don't forget that owning a home includes yearly property taxes. You may have to pay HOA (Homeowner's Association) dues. Homeowner's insurance is crucial. And, you will have to pay for your own water, gas, and sewer costs; these may have been paid by your landlord in the past.

Before going all in and buying a house, consider creating a new budget to which you will be forced to adhere when you buy, and try it on for size for six months. Put the extra money you will spend each month in a savings account and see if you are able to live without it. If it works out, you can put the extra savings towards your down payment or keep it as an emergency fund for your new home.

Do I Understand the Level of Responsibility Involved?

Furthermore, you will have much more responsibility for your home as a homeowner than you did as a renter. You will be responsible for all maintenance and repairs as well as the costs associated with them. 

Disasters and accidents can occur at any time. Will you be ready to deal with them? Experts suggest that you have a large emergency fund on hand at all times. It should contain at least eight months' worth of living expenses for the best results.

Also, think about your current employment. Is it steady and reliable? If it is unpredictable, you need to plan ahead in case of any changes. You may be able to pay your mortgage now, but will that continue to be the case in the near and distant future?

Do I Know What I Want and Need?

You may have a very clear picture in your head of the home you wish to own. However, that home may be out of your price range or it may simply be impractical for your lifestyle. Take time to consider what you need and can afford versus what you want.

Perhaps you don't even need an entire house. Maybe starting with a condo or townhome would be a good first step for you.

If you have a family or plan to start one, think about how much space you will need. Be sure to check out the neighborhood and local schools to see if they meet your needs, and make sure the area is safe, too.

When You're Ready, You're Ready

If you find that you have been able to answer all of these questions in a way that is satisfactory for you, then congratulations. It may be time for you to begin shopping for a house. Please search our listings on Hommati to see available homes near you.

If some of these questions and suggestions gave you pause, then now might not be the right time for buying a home. That's perfectly okay, of course; give it some time, develop some answers, make some plans and try again in the future. 

It's better to have it be the right time than it is to rush things. Once you are truly prepared and ready to buy a house, you will have a much better chance at homeownership success. Good luck and happy house hunting.