Home ownership is a well-established piece of the American dream. The Victorian house with the sprawling green yard and white picket fence is nearly indistinguishable from the successful job and fast car.
But, although it’s a worthy goal to work toward, not everyone is ready to buy a home of their own. So how do you know when you’re ready to stop renting and move into the next stage of your life? Here are some common signs that you’re ready to start planning for the next step.
1) You’ve settled into a location
The typical rule of thumb is not to buy a house unless you can commit to a location for at least five years. Any sooner than that and it’s likely you’ll end up losing money due to transaction costs and fluctuating markets. Buying a home is a huge commitment, and if you can’t commit to a location than odds are you aren’t ready to handle the burden of owning your own home.
2) You successfully budget
You not only understand financial planning, but are actively participating in it. You have a monthly or even weekly budget that you strictly adhere to. You know where your money is coming from, and more importantly, where it’s going.
3) You’ve saved various funds and know your credit
You have saved funds for the important things in your life and are actively monitoring your saving accounts. This can include an emergency fund, housing fund, car fund, and even a vacation fund. You’re not only saving money, but make smart use of it, having little to no frivolous spending.
The more money you currently have saved the better. Down payments are a significant part of purchasing a home, and having the money to make a large down payment is a great signal that it might be time to stop renting.
Also, you’re aware ofyour current credit scoreand have improved it as much as possible. This means you’ve had a credit report recently and have taken care of any issues within. Your credit score is as good as you can make it and is worthy of homeownership.
4) You have a reliable income
This often goes without saying, but you need to be extremely secure in your income in order to even consider buying a house. Mortgage payments don’t simply go away, and you need to be ensured in your ability to continue to meet them, month after month.
5) No recent large purchases
This particularly pertains to vehicle purchases, but can include a number of items. Anything that has already strained your budget means you’re not quite ready for the next step into a home.
6) You’re not pressured to buy
If you think buying a home is now or never, odds are you might be better off with never. Any pressure to buy can skew your judgment and cause you to rush into a rash decision. It is definitely important to be secure in your choice, and not forced into it.
7) You’re willing and have the time to research the market
You know you’re ready to stop renting when you have the time to buy a home in proper fashion. This means copious research, looking, reading, and thinking. So much consideration and time goes into learning properly about the market, the mortgage that is right for you, and the location of your future home.
It is nearly impossible to be 100% ready to buy a home. Nevertheless, it is important to be as ready and sure of your decision as you can be. These signs, taken together, should be a strong indicator that you’re ready to stop renting and buy your own home.
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