Thursday, November 17, 2022 / by Ana Baldner
Now that mortgage interest rates have been on an upward trek, coupled with the sustained and substantial surge in home prices across the country, housing affordability is a challenge for many prospective homeowners.
Here are eight signs you may be ready to buy a home:
Your rent is rising significantly
It's not new news that Rental prices are rising significantly, even on the Space Coast! Rising rent not only makes it harder to budget your monthly housing costs, it also makes it hard to save for other financial goals. When paying your rent begins to feel like a bad investment and you want to start building equity for the future, it might be time to consider mortgage loans instead.
Your credit score is solid
A big obstacle when leaping into owning a home is qualifying for a mortgage. Low credit scores are a common reason why some fail to qualify. One sign that you're ready to buy a home is having a healthy credit score. A good credit score gets you better interest rates and loan terms.
Your debt is manageable
Debt to income ratio is a key factor that lenders look at. The higher your ratio, the more risk you pose to a lender. Keep your credit card balances low and debt under control for it to have a positive influence on your credit score.
You can afford a down payment
First-time homebuyers don’t have proceeds from another home to help fund a down payment. It’s one of the main reasons why the down payment is the biggest hurdle to homeownership. This is one of the key differences between renting and home ownership, there is a large up front cost that is hard to get through after renting for so long.
You have enough set aside for maintenance costs
When there are maintenance issues around your home such as roof leaks or the A/C unit goes out, being a homeowner means that's your responsibility. Same goes for property taxes, routine maintenance, and homeowners insurance. Routine maintenance itself can add up to almost $3,000 annually, But replacing big ticket items can mean even more spending. A sign you're ready to become a homeowner is having enough to set aside for these costs.
You're going through a major life change
A big catalyst in this decision is usually a life change! Getting married, growing a family, or retiring are all reasons that people make the jump into homeownership. A new phase of life may mean a need for a change in space and more stable living.
Your lifestyle is stable
Buying a home involves a lot of upfront costs that can take a few years to recoup. So if you anticipate moving before you can recover those expenses, homeownership might not be suitable for your changing location.
Few people work at the same company for decades anymore, but a renter who is ready to buy a house should have job security. A stable job means stable income, which lowers the risk that you will stop making your mortgage payments and default on the loan.
You know what you want
Determine what you need and what is most important to you. Is it being near a good school or within walking distance of your job? Do you mind navigating stairs or having neighbors living above you? Do you want lots of amenities? It’s smart to have a good idea of the area or neighborhood you want to live in and the type of home you want before you begin your quest. There are lots of options out there, and each one has its own considerations for costs, upkeep and personal enjoyment.
If you’ve moved to a new city or state to take a job, it might be a good idea to rent until you’ve familiarized yourself with the area. That way, you are more likely to choose a home and neighborhood you’d like to settle in.Buying a home can be a good idea depending on your situation. In general, homeownership will benefit you more than renting, because you’re gaining possession of a valuable asset. As you weigh the decision to buy a home, make sure you can still reach your other financial goals. A new mortgage shouldn’t prevent you from paying down student loans or credit cards, or from saving for retirement.
We know the process of buying a home can sometimes feel a bit overwhelming, but you are not alone! Contact our team at Florida Lifestyle Realty where we can help you learn more about the process, what to expect, and how to set you up for success
Florida Lifestyle Realty