Are You Ready to Buy Your First Home?
If high interest rates and surging home prices had kept you from buying your first home, now is the time to start looking again.
Buying your first home is a big step. But remember, you can’t build equity paying rent to an apartment owner. While the property owner reaps the rewards of increasing real estate prices, you go nowhere financially. As a renter, you are adding to someone else’s wealth. Why do that?
Here are nine signs you are ready to buy your first home.
1. You’ve Saved Enough for the Down payment.
Relax, you may not have to put down much at all. In fact, if you’re a veteran (thank you for your service!), you qualify for VA financing requiring only a dollar down. Yes, that’s $1. If you are buying in Boulder City, you can finance through the USDA rural home loan program. That’s right, clean, green Boulder City is considered a rural area and the USDA program requires no down payment. FHA loans require 3.5 percent down, as do Section 203(k) loans. What the heck is a 203(k) loan? It is a type of FHA home renovation loan that includes both the cost of buying a home and the renovation costs. Conventional loans require anywhere from 3 to 20 percent down.
2. You Have Good (Enough) Credit
I say good enough because it’s possible to qualify for an FHA loan with a 580 credit score. However, it’s best to get your score to 640 or higher. There is good news. Fair Isaac (FICO) has changed the way credit scores are figured. The Wall Street Journal reported, “If an applicant’s traditional FICO score falls short, a lender can offer to have the score recalculated to reflect banking activity. Would-be borrowers with at least several hundred dollars in their accounts, who have had the accounts for a while and who transact frequently and don’t overdraw are likely to see their scores rise, FICO said.”
3. You Can Afford a Mortgage Payment
Do some figuring now. Your Debt to Income ratio must be 36 percent or below. If you are currently renting a house or a new apartment, your DTI is likely in line with interest rates back down.
4. You Have Steady Employment
You need to have worked at the same job for the same company for at least two years. If you haven’t been at your present job that long, having worked at similar positions with other employers will help. Steady employment is critical to loan approval.
5. You are Staying Put for Awhile
Buying only makes financial sense if you plan to live in your new home at least three years. If you have to turn around and sell right away, sales commissions, loan and moving costs will make buying a losing proposition.
6. You have Kids, or Kids on the Way
Kids provide an extra incentive to buy a home and live in a nice neighborhood with good schools. Apartment projects are not the best environment to raise children.
7. You are Tired of Renting
It bears repeating, don’t build someone else’s wealth with your hard earned money going towards rent. Besides, it’s good for the soul to make something your own and fix it up the way you want it.
8. You Can Afford to Make Repairs
Owning a property comes with responsibilities. Things will break. If you are a handy person this will be less of a burden. If you are not, be ready to, first, find reliable repair people, and, second, be able to pay for the services.
9. Your Partying Days are Over
Well, maybe not entirely. However, remember, it’s your place and you want to keep it nice. Plus, the mortgage company wants a payment each month, and there are those unforeseen repairs that must be paid for. Your shelter and investment must take priority over having a good time.
If you are looking to buy your first home (or 10th), call me at 702-303-8243.