April 27th, 2020
You’ve Got Your Debt Under Control
You might have some sort of debt whether it’s student loans, credit card debt or something else. However, if you’re well on your way to becoming debt-free, it might be time to think about investing in a home. Any extra cash flow you can use to spend on a home rather than on debt might be an easy revenue source to save for a down payment.
Your Credit Score Is On The Rise
Your credit score plays a major role in your ability to get a home loan. It’s usually lower when you’re just getting started in your career or when you’ve just graduated from college. As you pay down your debt and prove yourself to be a dependable borrower over time, your credit score will go up. You can qualify for most mortgages with a credit score of at least 620.
You Have A Down Payment
Contrary to popular belief, you don’t need to have a 20% down payment to buy a home. It’s now possible to buy a home with as little as 3% down on a conventional loan or 3.5% down on an FHA loan. You might even be able to qualify for a VA loan or a USDA loan with no down payment at all.
Much of the time you’ll find that you have a few benefits when you bring a large down payment to the closing table. A 20% down payment will allow you to avoid paying for private mortgage insurance (PMI). PMI is a special type of insurance that protects your lender if you default on your loan. Most lenders require that you pay PMI if you don’t put 20% down on your loan. You can save thousands of dollars in insurance costs over time with a solid down payment. It might be time to invest in a down payment if you have the money saved.
You’re Steady In Your Lifestyle
Buying a home is a big commitment and most mortgages last between 15 – 30 years. You don’t need to stay in your home for that long, but you should still be sure you love your area before you buy a home. Don’t know where your career is going? Think you might want to move to a new city or your income isn’t steady? You might not be ready to buy a home. But if you think you might want to settle down, start a family or stay in one place for at least a few years, buying a home might be a smart move.
You Need More Space
You might be perfectly happy in a one-bedroom apartment if you’re single or living with a partner. But do you have children or are you thinking about starting a family? You might decide you need more space. Just one extra bedroom can make a huge difference.
It’s important to ease into the home buying process if you’re not ready. If you have a stable career, enjoy where you live, have a down payment and understand all of the costs of owning a home, you might be ready to buy a house. But you might want to stick with renting if you still have excessive debt, think you might switch careers soon or you don’t have an emergency fund.