Don’t be scared to take on the commitment of being a homeowner as it’s one of the most fulfilling financial moves you’ll make in your life! Nothing compares to the excitement of buying a home. Yes … it’s a major step, but it’s also a major investment.
Not everyone is ready for what comes with owning a home, especially the maintenance and mortgage payments. Some people are more afraid of the process of buying a home than actually owning a home.
Here’s how you know that you are ready to take those next steps:
- You are decisive and know how to make informed decisions about your future. If you change your mind every 5 minutes about what color shutters you want or what direction you’ll be facing when looking out your bedroom window, then maybe you should postpone the buying process. After all, if you have a hard time deciding on the small things, imagine what it will be like when it comes to the tougher decisions, such as deciding on where you will live or negotiating on price.
- You have researched the home buying process and know what to expect. Researching ahead of time allows you to set realistic expectations. Home buying is a process (the key-word here being “process”) and doesn’t happen overnight.
- You have a good credit score. The truth is that lenders won’t lend to someone whose credit score is not at a certain level. A good credit score shows that you are responsible and are capable of making loan payments. Find out what your loan company considers a good credit score.
- You are financially secure and responsible with your money. A constant flow of income is necessary for making mortgage payments and for the upkeep of your home. Yes … a mortgage may be the same amount as paying the rent for your last apartment, but leases are a lot shorter than your 30-year mortgage. And you must be prepared for added home expenses.
- You have a down payment and purchase budget. Typically, a down payment is 20% of the cost of the home. Think about how much house you will need and factor this into how much you want to put down on a home. If it’s just you, a spouse, and possibly a pet, don’t overdo it.
- You have a good chunk of money set aside for emergencies. And by emergencies, I don’t just mean personal emergencies. This goes for home emergencies as well. What if you discover termites, your basement floods, or your roof leaks? Be prepared for whatever extra home expenses may come your way.
- You have little to no outstanding credit cards or debt. Your perceived debt can include your credit card limit (your allowable amount you can charge) and even back taxes. Whatever the case, taking on more debt when you already have debt is not the best financial move.
- You are ready to take on the joys and responsibilities of owning a home. It’s all on you – lawn maintenance, home repairs, and other expenses. Know what you’re getting into before taking on homeownership.
You may consider talking to your family and friends about their home buying experiences so you’ll know what to expect. If you feel that homeownership is right for you, check out the Homeownership & Taxes page on our website for important tax-related information. Good luck in your home search!
Disclaimer: Tax Lounge is an informational source for industry news and related topics. We take every effort to provide you with the most honest and accurate tax information, but this information should not be a substitute for professional tax advice. Use our office locator to find your local tax office or click here to subscribe to our free newsletter.