Many times it is very difficult for an individual to figure out when exactly they are ready to purchase their first home. Mainly because purchasing a new home can easily be one of the biggest decisions this person will make in their lifetime. It is never wise to just jump into buying a home because the price is right or you feel you have a decent amount of money saved up. It is very crucial that you take the time to think about your entire situation, and all the responsibilities you will take on after making the purchase.
Remember most home loans are thirty year terms so it would be smart to wait until you have a steady career that you feel will last you many years. Also it is important to keep a close eye on todays mortgage rates because they seem to go up and down from week to week. One week we may see the average rate for a thirty year fixed at 5.5% and the next week it may go down to 4.75%. This is extremely important due to the condition of the housing market.
Below are questions you need to ask yourself to help figure out if you are indeed ready for this commitment:
Do you have a steady and reliable source of income at this time?
This is one of the most important things you need to decide. Have you been working at the job for multiple years? Is the business you work at steady and does not seem to be slowing down? These questions are extremely important, especially now in our economic crisis. Major companies that were doing great in the recent past may have been greatly affected by our recession, and may therefore be likely to run out of business. You need to decide whether or not your income seems reliable now and in the future.
Do you have a good track record of paying your bills on time?
This is another thing your lender is going to greatly examine. They will pull up your credit history to see how you have managed your other obligations in the past. If your credit history is poor, and shows you cannot manage your debts wisely, purchasing a home may not be right for you.
How many current long-term debts do you have?
If you have multiple car loans or lots of credit card debt, obtaining even more debt with a home loan may find you in a whole world of trouble. Remember you never want to take on more debt than your budget can handle.
Do you have the financial ability to pay your monthly mortgage each month, plus any additional fees that may come with it?
You will need to carefully sit down and calculate your entire financial situation to see where you are at each month. If your budget shows that you have enough cash for the mortgage payment and some left over each month, then you may be able to take on these payments no problem.
If you had answered all of the above questions with a “yes” than you may be ready to purchase your first home. In fact, over the past few months the average interest rate for a thirty year fixed mortgage has been at record lows and with home values very low, this may be the ideal time for some individuals to make that purchase.