8 signs you’re prepared to stop renting and buy a home
- Are you tired of your rent changing?
Having your rent increase makes it difficult to budget your monthly housing costs. When paying rent becomes a bad investment and you want to establish equity for the future, it is time to figure out what type of home loan you would qualify for.
- Has your credit score improved?
Having a good credit score will help in obtaining better interest rates and loan terms.
- Are you good at managing debt?
Lenders look at debt-to-income ratio in potential mortgage applicants. This is a key metric for calculating monthly debt versus income. The higher your debt the more risk you pose to a lender.
- Do you have enough set aside for the extra costs of owning a home?
Renters do not have to worry about a pipe bursting or taxes due. This is not the case when you own a home.
- Can you afford a down payment and closing costs?
Down payment requirement depends on the type of loan you are obtaining. Being pre-approved will help determine the amount needed. Closing costs are typically equal to 2% to 7% of the sale’s price.
- Are you ready to settle down in one place?
Purchasing a home involves a lot of upfront costs. These costs can take several years to recoup. If you are planning on moving before you are able to recover said costs, owning a home may not be the right move for you.
- Are you going through a major life change?
Marriage, children, and growing a family are several of the major life changes for renters to buying a home.
- Do you know what you want?
By determining what you need and what is important to you, such as, neighborhood and the type of home, is a great starting point.
If you answered “Yes”, you are on your way to start the process of owning your own home.
“For prospective and actual homebuyers, the decline in mortgage rates has provided a much-needed boost to housing affordability,” says Mark Hamrick, senior economic analyst for Bankrate. “This comes after home prices have risen steadily on a national basis since 2012.”
“For those who weren’t initially intending to buy a home, the improvement in affordability might be what helps them to get off the proverbial fence.”
Deciding to rent or buy a home is a major decision.