How Do You Know If You're Ready To Buy a Home?

The wild-wild housing market had many people in panic mode — worrying that if they didn't act now, they may never be able to buy a house amid record-high prices and increasing interest rates. With today's changing market conditions, hopeful homebuyers may be in a better position to act. It’s important to remember, though, that no matter what the market is doing, buying a home is something you shouldn't rush into. 

A mortgage is one of the biggest — and most important — responsibilities of your life, so before you buy, here are some things to consider. 

Little to No Debt

While there’s no hard rule that you have to be out of debt to buy a house, the lower your debt, the higher your pre-approval and the lower your interest rate — a homebuyer’s dream formula. In addition to these perks of having little to no debt, you should have more dispensable income to spend on your mortgage payment, repairs, furnishings, and anything else your heart desires.

Robust Savings

For homeowners, expenses seem to pop out of nowhere. From the down payment, to closing costs, to taxes — and that’s before you even move in! After you move in you have to think about furnishing your home, replacing appliances, and any other emergencies that come up. 

It’s imperative — especially in today’s changing market and potential recession — to give yourself a healthy safety net for all the expenses of home ownership. Some experts recommend having six months of expenses set aside in your savings account, while others recommend having up to a year’s worth. 

One thing’s for sure, the more you have in your savings , the less stressful homeownership will be. So, make sure your savings account is up to par before you sign on the dotted line.

A Steady Job

Of course, no job comes with a 100% guarantee of permanent employment. But, the longer you’ve held a position, the more likely your job will be viewed as steady enough to get your mortgage approved. One big no-no during the home buying process is switching jobs, or God forbid, quitting your job.

Changing jobs can impact your loan approval, which means you may lose the approval, or your monthly payment could increase beyond your ability to pay comfortably.

Monthly Payment

We’ve all been there, scrolling through Zillow, and we find the perfect house — and it even has a pool! We use the website’s payment calculator, and much to our surprise, the monthly payment seems completely manageable!

Not so fast. It’s important to remember these online payment calculators often don’t consider all of the expenses associated with a mortgage payment. They also default to you providing a full 20% down payment. In reality, there are many more factors that will go into your house payment, including:

• Property taxes — which can increase each year (sometimes pretty significantly).
• Homeowner’s insurance.
• Homeowner’s association fees.
• City taxes and fees.
• Water, sewage, and garbage.
• Private mortgage insurance (PMI) if you’re unable to provide the full down payment.

These added charges can add hundreds of dollars to your monthly payment, so it’s important you remember these to get a full picture of your monthly expenses. Then you can ask yourself if you can realistically afford it.