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Signs You Are Ready to Buy Your First Home
Buying your own place is a huge step. Unfortunately, many people take the leap without considering the consequences. They end up in debt because they find out too late that they aren’t able to afford the monthly payments. If you're looking to make the long-term commitment of homeownership, you must be financially ready first.
Shopping for a home can be exciting and scary at the same time. How do you know if you’re ready? Here are some signs that tell you’re a reliable person and have the means to afford purchasing you first home.
You have a good credit score
A good credit score is a must in order to get a lower interest rate on your mortgage and a lower monthly payment. You can check your credit score here. Make sure it doesn’t contain any errors. If it does, straighten them out. Your score doesn’t have to be perfect, but a decent financial history will help you obtain a better loan. You can find some tips on how you can boost you credit score here.
You have a reliable source of income
Having a steady job and feeling secure in your current position is a good sign. After all, buying a home is a long-term financial commitment and you have to make sure that you will afford the payments six months or a year from now. Don’t forget to consider additional expenses as well. You will be your own landlord, so you will have to pay property taxes, utility bills, insurance and make any repairs your home might need on your own.
You can afford a down payment
A down payment usually represents 20 percent of the home price. If you can’t afford this, you may have to pay extra for private mortgage insurance or settle for a loan with a much higher interest rate. Furthermore, if you can put down the 20 percent, you instantly build equity. This might come in handy when you need an extra source of cash.
You are able to live within a budget
Being able to create a budget, respect its limitations and track your spending is extremely beneficial. You should know where your money goes every month in order to figure out if you can afford becoming a homeowner. It will also help you keep track of your monthly payments.
You have some savings for emergencies
If you have enough money set aside to cover a few months of your living expenses, you will be covered in case something disrupts your steady income.
If you fulfill the conditions listed above, congratulations! You are financially responsible and will be able to handle your monthly payments without problems. Find the best offers for first time home buyer loans and get ready to become your own landlord. Good luck!
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