Signs That You’re Ready to Be a Homeowner

own a home

It takes financial stability, commitment, and readiness to be a homeowner for the first time. Deciding to shift from renting to owning a home is a major decision, and there is a lot to consider (such as mortgage rates) before finally concluding that buying a house is right for you. Being a homeowner is not for everybody, and you must not feel the pressure to own a home just because a lot of your friends are doing it or your parents suggest it.

The most recent findings of the United States Census Bureau show that 64.4% of Americans own their homes, and that is 3.3 points down from 67.7% in 2008. The age distribution in the homeowner demographics has also changed dramatically over the years – the share of new homeowners who are under 30 declined from 29 percent in 2001 to just about 15 percent in 2015. Millennials seem to be putting off buying homes and recent studies revealed that it is not because home ownership is not a priority. In fact, most millennials consider buying a home their top priority, even over getting married and having kids. Factors such as student loan debt, high rent prices, and the consequences of the 2008 financial crisis just get in the way of it.

Buying a home is a major and personal decision an online notary makes this process easy and convenient. There is no deadline or an alarm that will notify you that it is time to be a homeowner – but there are indications that you might be ready to be one. Here are three aspects that you may want to look at – financial stability, commitment, and preparedness. If you find yourself identifying with the items listed below, then maybe it is time to look at your options in terms of buying your first home.

Financial Stability

Your decision to own a home will mostly depend on how sound your finances are. You need to be able to prove that you have the capability to pay for the mortgage. Take a look at your debts, savings, emergency fund, and credit score; and if you find yourself agreeing to the following statements, then you might be financially sound to purchase a home.

You are debt-free, or at least have your debt under control. When you buy a home, you need to have a regularly available fund to pay for mortgage. Having a portion of your income go to debt payments will limit the funds available for mortgage payments. The extra cash you have that does not go to debt can cover other expenses being a homeowner entails such as property tax, repairs, maintenance, and furnishings.

You have a decent credit score. Aside from being debt-free, you must have a good record as to how you’ve been handling your finances, particularly your past spending and repayment activities. Banks and lenders will rely on this information to determine whether they can trust you to pay them back and what interest rate to apply. This one number paints your financial picture. Anything above 720 is considered excellent. If you are not sure what your credit score is, there are websites and apps you can use.

You have solid savings. Having this shows lenders that you have the capability and the discipline to save. Your savings is most likely where your downpayment will come from, so if your savings cannot cover 10%, or for some, 20% of the property’s worth, you are not ready to buy that property yet.

You have an emergency fund. You want to keep our head above water in case the unexpected happens. Buying a home is a huge expense, and you don’t want to be left empty-handed after the purchase. Financial experts suggest that you must have between three and six months’ worth of expenses saved in an emergency fund. Treat your emergency fund like an insurance policy – you are protecting yourself in case something goes wrong.

Commitment and Preparedness

These two go hand-in-hand in making the largest financial decision of your life. It goes without saying that buying a home is a huge leap. Coming up with the decision to be a homeowner means you are fully committed and prepared to take on all the challenges, surprises, and responsibilities that it entails.

You see yourself staying where you are in the next five to ten years. If you don’t, then you might not be ready to buy a home. This is a long-term investment. Most mortgages are the traditional 30 years, which does not mean that you are stuck in one place for three decades – however, it is important to stay put for five to ten years so you won’t lose on the investment. If you see yourself staying in one place because of a stable job, or the good school your kids attend, then buying a home could be a viable option.

You are ready to deal with the legalities. Owning a home entails a lot of paperwork, too. You will need the help of a lawyer or a real estate agent to guide you through the nitty gritty of things, especially if you encounter problems.

You are ready to cover for maintenance and renovations. One advantage of renting a place is you don’t need to worry about the maintenance and renovation costs of the property. When you decide to be a homeowner, you also say yes to both regular and unplanned expenses for repairs and renovations. Whether you plan on hiring people to do the job for you, or going DIY, you have to make sure that you regularly save a certain amount for maintenance costs.

You are willing to manage taxes, mortgage, and utilities. When you rent, you have an amount set aside every month to cover for everything related to your living space, as well as utilities if they are not included in the rent, yet. When you own a home, the costs are broken down to single items such as taxes, mortgage, and association dues, among others. Being a homeowner entails a lot of accounting, so you must be willing to delve into this tedious task on a regular basis.

You are emotionally ready for the whole journey. From the time you make the first call to your real estate agent, you are in for a roller-coaster of emotions. All the bidding and waiting for your offer to be accepted, being refused, or losing the place you have been eyeing can be emotionally taxing. Another thing that you have to be prepared for is selling the place in the future. It is understandable that you will have an emotional attachment to your first real estate property, so set your mind from the beginning that you might have to let go of it a few years down the road as this is how the real estate game really goes.

You have an understanding of the housing market. After all, buying a home is an investment, which means that it can go either way. Familiarize yourself with the current interest rates so that you can negotiate with the upper hand on more real estate properties. Pay attention to the current housing market in order for you to make sound decisions in terms of selling or renting out your place in the future.

This article is written by Arleen of OpenListings for NoraGouma Magazine.

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