Taking the leap from renting to owning is a milestone many people dream about.
If you’ve been thinking about taking the first steps to becoming a homeowner, you might wonder, “am I really ready to purchase a home?”.
Here are a few telltale signs you are ready for homeownership:
1. You don’t have a lot of debt
Your mortgage lender will look at your DTI (debt-to-income ratio) when you go through the pre-approval process. Lenders prefer borrowers with a lower DTI, as this shows you manage monthly payments successfully and repay the money you borrow.
2. You have good credit
Your credit has a huge impact on whether or not you’re able to qualify for a mortgage, what kind of home loan you can qualify for, and what kind of interest rate you’ll have to pay. The minimum credit requirement to purchase a home is typically a 590 minimum FICO score, but a 740+ score is ideal.
3. You have a solid emergency fund
Being a homeowner means you’ll need to invest some money into your home to keep up with maintenance and life challenges. What happens if you lose your job and don’t have steady income for 3 months? Building an emergency savings fund ensures you have a safety net to fall back on if something unexpected happens in your life or to your home.
4. You have a stable job
Most lenders prefer that you have worked consistently in your current field for at least two years, as job stability is essential to get approved for a home loan. If you have consistent income coming in each month, you’ll be able to make monthly mortgage payments without a problem!
5. You are ready to settle down
Are you ready to plant some roots and settle down? To avoid capital gains tax, you’ll need to live in your home for at least 2 years before selling. If you don’t plan on moving anytime soon and you’d like to start building equity rather than paying a landlord, homeownership seems like the right move!
Curious about the home buying process? We’d love to talk more with you and answer any questions
Photo by: One Look Real Estate