Home buying is a very big decision, not only does it impact your current finances, it also impacts your future budget especially if a mortgage is involved.
So how do you know if you are already ready to buy a home? Here are a few guidelines:
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1. Presence of a Stable Income
If you have a job or a business, that would make you one step nearer to qualifying for home ownership. Although of course, this money source should have been present for about 2 to 3 years for it to be called reliable. If you do not have a stable income source, it’s better to wait a bit and assess your financial future before you jump into home ownership.
2. Payment Records
The best way to know if you are ready to buy a home and spend for your mortgage is by looking at your payment records. If you have been able to pay for your current bills without difficulty, you may have the right discipline to pay for your home on a monthly basis, just as long as you have spare budget for that.
3. Outstanding Debts
If you have lots of outstanding debts, adding a new one may be a bad idea, especially if you know that adding a new bill may affect your financial status. Although of cours, a financial assessment would tell you if you are capable of adding a new monthly debt or not. However, if you have zero to little monthly dues, then it would be easier to tell that you are indeed ready for a mortgage. So as a conclusion, it’s better to decrease debts before entering home ownership.
4. DP Budget
Down payment is a big part of mortgage. So if you have not saved up for it yet, then it’s better to start with that first before mortgage application. That way, you will be fully ready to drop cash when you apply for a home loan.
5. All Additional Costs
Aside from the down payment, there are many costs that come with home ownership. So you must have saved up a good amount of cash to say that you can now own a home. Costs include: all closing costs for the initial application: and continuous home repairs.
Overall, the best way to determine your qualification for home ownership, or adding one more monthly debt in general, is to do an accounting of your income, and by asking for a pro’s advice.