Q: I’ve saved up for a down payment and drawn up a wish list of what I’m looking for in a new home, but I’m getting cold feet. How do I know if I’m really ready to buy a house?
A: It’s normal to feel hesitant about going through with what may be the biggest purchase of your life. To help put you at ease, we’ve compiled a list of questions to ask yourself before buying a new home.
Can I afford to buy a house?
Before viewing properties, remember that purchasing a home will cost more than just the down payment. You’ll also need to cover closing costs, which typically run at 2-4 percent of the total purchase, as well as moving costs and possibly new furniture and renovations for your new home.
Can I afford the monthly mortgage?
Most lending companies will grant a loan to a homebuyer if the monthly mortgage payments do not push the buyer’s debt-to-income ratio above the recommended 43 percent. Work out the total for your pre-mortgage debt before applying for a loan so you have an idea of how much house you can afford.
Am I ready to settle down?
Buyers who don’t plan on staying in their homes long-term may end up incurring a loss. Consider factors like your career, family planning and evolving demographics of a neighborhood when trying to answer this question.
Does buying a house in my neighborhood make sense?
In some neighborhoods, rentals are relatively cheap while houses sell for far more than they are worth. In these neighborhoods, buying a home may not be the logical choice.
Is my credit score high enough?
Most lenders will only grant a mortgage to borrowers with a credit score of 650 or higher. If your score doesn’t make the cut, you can boost it by being super-careful about paying your bills on time, paying credit card bills in full each month and keeping credit utilization low.
Do I have a plan in place for repairs?
When a renter has a leaky faucet, they call the landlord and the problem becomes theirs. When a homeowner has a leaky faucet, it’s their own problem. They can either fix it or hire someone to do the job, but it’s a good idea to have a plan in place before the first thing in a new home needs fixing. If you’re handy enough to make repairs on your own, you’ll need to be willing to give up some free time to tend to such things. Otherwise, it’s best to have a tidy sum put away to pay for necessary repairs before purchasing a home.