Knowing whether you’re ready to buy a house or not isn’t as simple as checking your credit score. The decision to purchase a home is a huge financial responsibility that most don’t take lightly.
So, how do you know if you’re ready to buy a home? Here are five that may tell you if you’re ready to take that next step.
Please keep in mind that everyone’s situations are unique, so it’s best to consult with a financial advisor prior to making any life changing financial decisions.
1. You Have a Full Emergency Fund: Remember when you had to pay first and last month’s rent plus a security deposit to get that apartment? Well, get ready to have to pay more than that AND be able to handle any things that pop up. Your landlord won’t be there to help you out this time. A good emergency fund usually has three to six months of expenses.
2. You’ve Run The Monthly Numbers: In many cases, a mortgage may be less than your monthly rent, if you do rent, that is. However, there are many other expense that go along with home ownership that you may not consider until it’s too late. Be sure to do your homework to determine all of your upcoming monthly expenses.
3. You Plan on Living In Your Home For A while?: This question may sound silly, but if there is the possibility that you may be moving in less than five years, you may want to reconsider purchasing a home. When it’s time to sell, you may end up losing money in real estate commissions and other fees. Five years is usually the minimum you’d need to live in a home to break even when selling it.
4. You Have Job Security: If your job is a bit shaky or unstable, you may want to rethink purchasing a home until you are able to plan better for a year or more ahead.
5. You’re Okay with Slashing Unnecessary Expenses: If you’ve reached the point where you are okay with doing away with extra expenses, such as dining out, buying the latest video game console, or shopping online three days a week, you are probably in the right mindset to move forward.
Again, there are many, many, many, many factors that each person will want to take into account before purchasing a home. While these questions are good to ask yourself, there are probably more that you’ll need to go over by yourself, possibly with family, and with your financial advisor.
Contact The McLean team of Steel Valley Investment Group to get the ball rolling.