Buying your first home is a rite of passage that many people dream of. However, before you take the plunge, it's important to make sure you're really ready. Your finances have a lot to do with it, but it's not the only thing you'll need to consider.
Here are five important questions to ask yourself before you buy your first home.
This may be the most important question of all. It's completely normal to try living in a few different areas before you're ready to put down roots. However, you won't want to consider buying a home until you're fairly sure you plan to stay where you are for a significant amount of time.
Ideally, you'll want to commit to staying in your new home for at least seven to ten years, as this is roughly one full cycle of the housing market.
It will be easier to get a home loan if you've been in your current job for at least two years. More importantly, you'll want to know you can count on your current income before you commit to buying a home.
An unexpected job loss can completely upend your life. The loss of income could potentially cause you to have difficulty paying your mortgage. You'll also need to find a new job that's reasonably close to your new home. Otherwise, you may need to sell your home before you're ready or deal with renting it out.
While it's impossible to predict the future, make sure you feel fairly comfortable about the stability of your job before you consider becoming a first-time homeowner.
When deciding whether you're ready to buy a home, you'll need to take a close look at your finances. Make sure you have enough saved up for your down payment, your credit score falls within acceptable ranges, and you have an emergency fund.
It's a great idea to meet with a lender before you start your home search. This will allow you to have a solid understanding of how much you can really afford and what you'll need to bring to the table when you close. Having a pre-qualification letter will also increase the chances that the seller will accept your offer.
Remember that you'll need additional money beyond what's necessary to purchase your home. There's also the cost of keeping up with repairs and maintenance. This may include everything from maintaining your lawn and landscaping to the occasional need for a plumber, electrician, or handyman.
Caring for a home is also a labor of love. Make sure you're willing to put the time into keeping it looking nice and taking care of any small issues before they can turn into big problems.
Buying a home allows you to settle down in a way renting simply can't. When you rent, there's always a chance your landlord could raise the price or even decided to sell.
As long as you make your mortgage and tax payments, no one can make you leave a home you own. This will give you a strong sense of security.
When you're not worried about housing, you can also put more effort into focusing on other parts of your life — like getting that promotion, spending time with your loved ones, and getting more involved in your community.
If you answered "yes" to each of these questions, congratulations! You're both mentally and financially ready to buy a home. Soon, you'll get to enjoy one of the most satisfying adventures of your life.