The prospect of buying a home can be exciting, but it is not something to take lightly. Before you even think about buying a house, it’s important to determine if you are fully prepared for the commitment. Check out our readiness guide below to see if it is really time to take the plunge, or if you should hold off a little longer.
Do You Have a Stable Job?
Buying a home is different than renting, in that you are locked in to a mortgage payment for years, and usually decades. Before making a home purchase, consider whether your current job situation is stable enough to handle mortgage payments and the associated costs of home ownership like insurance, utilities, maintenance and more.
Is Your Credit in Check?
Your credit is one of the most important things to consider when contemplating a home purchase, but it isn’t just your credit score! Lenders take into account the length of your credit history, how many lines of credit you currently have, your payment history and other important factors. If your credit is in good shape, you might be one step closer to purchasing a home. However, if your credit could use a little work, you might consider waiting until you can improve your credit so you get the best possible mortgage terms.
What Does Your Debt Look Like?
Nearly everyone comes into a home purchase with a little bit of debt, whether it is student loans, medical bills, credit card debt or even just a car payment. However, before you decide to take the plunge into home ownership, it is important to consider your debt and how it affects your life and your finances. Do you currently have large monthly payments toward your debt that keep you from putting anything into savings? Are you unable to make more than the minimum payments? If your debt is keeping you from reaching your goals and living comfortably, consider paying down your debt first so you have less on your plate when you finally purchase a home.
Do You Plan to Stay in one Place for a While?
In many cases buying a home can cost less than renting in the long term—but most buyers don’t break even until at least year five. This means that if you don’t plan on staying in your home for more than just a few years, buying might not make the best financial sense. Before you make the decision to become a homeowner, consider whether you want to stay in one place for a long time. Also consider if you might be facing any big life changes in the next few years, like job changes that might necessitate a move, or an expanding family that might need a bigger home sooner rather than later.
Are You Willing to Commit to Home Maintenance?
Renters enjoy many amenities in their homes, with one of the most convenient being that they are usually not responsible for repairs and ongoing maintenance to the property. Not so for a homeowner! When you own your home, there is no landlord to call when a pipe starts leaking or a roof needs new shingles—it’s up to you to deal with the hassle and the cost of repairs and maintenance to your home. If you aren’t willing to commit to home maintenance, or are unsure if you can afford the cost, you may want to consider passing on a home purchase for now.
Do You Have a Down Payment?
The down payment is one of the largest hurdles keeping potential buyers out of homes. However, it is a common misconception that a 20 percent down payment is required to buy a home. In fact, with good credit, many buyers can purchase their home with as little as 3-5 percent down! The NC Home Advantage Mortgage™ from the NC Housing Finance Agency can provide forgivable down payment assistance up to 5 percent of the loan amount to cover your down payment or give your existing savings a boost!
Learn more about the NC Home Advantage Mortgage™ and the other ways that the Agency can help make home ownership happen for you at www.nchfa.com/home-buyers.
