Are You Prepared for Homeownership? 5 Signs You’re Ready to Buy a House

Estimated reading time: 2 minutes

Deciding to take the leap into homeownership is a big decision, so how do you ensure you’re ready? Here are 5 signs that you’re ready to jump in.

1. You Have No Short-Term Plans to Move

Homeownership is a commitment to a specific location and neighborhood. Most likely, you’ll have to stay in your home for at least several years to get a return on investment. If you’re confident in your decision to stay, this could be a sign that you’re ready to lay down roots for the long term.

2. You’re Tired of Renting

When you pay rent, you pay for your landlord’s mortgage without any of the benefits. You’re at their whim if they want to raise your rent or enforce stricter policies, like how much you can personalize your rental unit. Meanwhile, owning a home provides the freedom to upgrade and customize. Plus, you’ll have stable monthly payments that result in your own equity growth.

3. Your Credit is in Good Standing

Your credit score and credit history are closely examined during the homebuying process to determine how reliable you may be about repaying your loan. The higher your score, the more trust your lender has that you’ll make your timely monthly payments. Your lender may be able to offer you a lower interest rate because of your high credit score, which could allow you to afford more house than if you had a lower score.

4. Your Debt is Manageable

Another major factor of your loan approval is your debt-to-income ratio (DTI). Lenders use this ratio to determine how much money you owe (your debt) compared to how much money you earn (your income). When your DTI is lower, it signals to your lender that your finances are stable enough to handle the additional debt of your monthly mortgage payment.  

5. You Have the Funds for a Down Payment and Closing Costs

Often, the biggest upfront costs for a first time homebuyer are the down payment and closing costs. How much money you’ll exactly need to purchase a home will be determined by your loan and specific situation. A down payment typically ranges between 3% to 20% of a home’s listing price. Closing costs also range between 2% and 5%.

Speaking with a Licensed Loan Originator is the best way to know if your chosen loan program and down payment matches your financial goals. Our Loan Originators work directly with borrowers from application and pre-approval until post-closing, ensuring you’re making the best decision possible for your needs.