Have you been asking yourself if it might be time to fulfill the American dream of home ownership? There are many factors to consider before making this decision — beyond low interest rates and competitive pricing. Here are five signs which might indicate that the time is finally right for you:
1. Debt Elimination
Being able to conquer outstanding car payments and credit card debt means you won’t have as many extra bills, which could diminish your available funds to be able to support a mortgage. The increased cash flow (which is now not going toward debt) gives the opportunity to make sure other homeowner related expenses can be covered, such as property tax, homeowners’ insurance, repairs, maintenance, furnishings, etc.
2. Job Security
While any job always comes with the possibility of uncertainty, the longer you are in a position or have obtained enough years as a business owner, the more likely that your job will be viewed as sustainable enough to back up home ownership.
3. Income Increase
No more than 30 percent of your total monthly income should be going toward a mortgage payment. However, you are able to put as much as 50 percent toward the mortgage payment, if you know you are able to live within your means until a raise comes your way. Earning more means you won’t have to put as high of a percentage of your earnings toward your house payment. Otherwise, lack of extra income could put you at risk for financial vulnerability.
4. A Solid Savings/Emergency Fund
Acquiring a new home can mean many potential surprises. In general, something unexpected will always come up in life as well. It is logical and vital to minimize stress and prepare in advance with extra accounts, including a savings account and emergency fund. After all, having to rely solely on a monthly income to cover unexpected costs (since monthly income has already been calculated and is needed for the mortgage and other bills) can create avoidable issues.
By having funds set aside in the amount of an equivalent of at least a year of monthly bills — is a good position to be in before considering a big move. Setting and sticking to a firm goal is the only way to attain this level of security for your household.
5. Higher Credit Score
After paying off debt and monitoring your credit report, you are able to increase your credit score to obtain a more ideal interest rate. Qualifying for a better interest rate means you get to enjoy a lower monthly mortgage payment, making the option to become a homeowner an obtainable goal.
These are just some of the signs that you can use to determine whether or not you are ready for the home-buying process. Our friendly and knowledgeable staff is happy to answer any questions or concerns you might have. Please contact us if you feel you are ready to pave the road to your new home!