Current conditions in the housing market make this an excellent time to buy a home. However, before taking such a bold step, a potential buyer should first exhibit a level of financial maturity. Here are some signs that show you’re ready for home-ownership, compliments of the Realty Times.
The trade magazine lists the following five points:
- You Stick to a Budget
- You Have a Down Payment
- Your Income is Stable
- Your Credit Score is Highest
- You Have an Emergency Account
1) A person that sticks to a budget each month is on their way to success in the housing market. It’s imperative that one knows how every dollar is spent in order to know how much home you can really afford.
2) Having a down payment means you should have saved 20 percent of a home’s total purchase price to put down. This has long been the industry standard. As Realty Times points out, what having this type of payment allows is for you to instantly have equity in the property.
3) Of course, you won’t get far house-hunting without an income and it’s far better if it is stable. When taking such a big step as buying a home, you want to make sure three years or five years down the road you will still be able to afford the mortgage payment.
4) A top credit rating will help to ensure the most favorable interest, which can ultimately save you thousands of dollars. If your credit rating isn’t top-knotch, you will want to pay off all debt and make sure any accounts that are in collections are handled appropriately. Typically, a buyer needs to have a credit rating in the 700’s to secure a mortgage loan.
5) Finally, you want to be sure and have enough money in the bank to cover at least three months of living expenses. This safety net can prove vital if there is an abrupt change in your income.