If you’re thinking about buying your first home, first off, congratulations! Purchasing a home is the most exciting thing you’ll ever do. The next homes you buy, not so much. But everyone remembers the first time they bought a house. It’s the same with a car. You’ll never forget the feeling you had when you first purchase a house or a car all by yourself. Here are some signs that you’re ready to be a homeowner.
1. You want to settle down. Buying a home is a huge investment, and many financial experts advise staying in your home for at least five years to avoid losing money. Maybe you want to start a family, or perhaps you’re moving forward in your career. Whatever your motivation, if the idea of staying put for the next five years is exciting, you might want to start house hunting.
2. You’ve researched mortgage options. There is more than one way to buy your first home. mortgage loan types range from conventional, 30-year mortgages to special loans for veterans or farmers. If you’ve already done your due diligence and have a good idea which mortgage is the best option for you, you’re well on your way to owning a home.
3. You know the pros and cons of renting vs owning a home.
There are obviously major differences between renting and owning a home. Renting provides more freedom, but owning a home typically offers greater financial rewards through tax breaks, equity, and other factors. If you’ve identified the pros and cons of both options and come to an educated decision based on the current market, your finances, and your future plans, home ownership might be a great choice.
4. You have excellent credit. Whether you rent or buy a home, excellent credit is important. As a renter you may be stuck with a large deposit, but if you go to purchase your first house with bad credit, your mortgage is likely to be denied altogether. A good credit score is also the ticket to a lower mortgage interest rate.
5. You want to take advantage of equity. One of the greatest benefits of buying your first home is the equity it accumulates over time. As the gap between how much you owe and how much your home is worth widens, the equity in your home becomes like a savings account.
Knowing that your equity can help fund a college education, prepare you for retirement, or save you from financial emergencies can provide you with great peace of mind.