Purchasing a home will likely be the biggest investment you will ever make in your life. While more and more millennials are opting out of buying a home, and instead choosing to rent, the benefits to owning a home arguably outweigh the negatives of renting for many people. Ask yourself these questions if you are trying to decide whether you are ready to go ahead and make the commitment to a mortgage and the responsibilities of being a homeowner.
Do I Like this area?
One of the biggest reasons why millennials are opting not to buy a home is the concept that buying a home will make them less mobile. More than ever, millennials are picking up and moving more than generations before them, and buying a home sets up roots, at least for several years. If you are happy with the area you’re living in and can foresee yourself living there in the long term, buying a home in that area is reasonable.
How is my credit score?
Take a look at your credit score and determine where you fall on the spectrum of credit scores. The highest possible score, which is incredibly difficult to achieve is 850, while the lowest is 300. According to the director of public relations at FICO, a credit score above 760 is going to allow you to get the best interest rates available. If you fall below a 700, consider figuring out ways to improve your score and try to keep balances low on your credit cards.
What are my finances like?
Critically look at your finances to see if you’re financially able to buy a house. If you have high monthly payments on credit cards and student loans, and other expenses. If you’re not financially stable without a house, adding a mortgage is only going to stretch your monthly budget even thinner. If you have raked up a lot of credit over the years, take some time to pay them down before signing on for a long term mortgage.
Do I have money for a down payment?
14If your finances are in order and you still feel ready to buy a home, make sure you have money set aside for a down payment. Most homebuyers set aside 3.5% on a down payment, but having more than that will help you finance any repairs, furnishings, taxes, and closing costs. Basically, the more money you can have for a down payment, the easier it will be to pay for improvements to the home you’d like to make in the near future.