Are You Ready to Be a Homeowner?
For first-time homebuyers, the prospect of purchasing a home can be daunting, especially in a housing market where home prices and mortgage rates are constantly changing and you’re not sure if now is the right time to enter the market or not. How do you know that you’re ready to be a homeowner?
Here are some signs that indicate you are probably ready to be a homeowner.
You Are a Good Renter
If you make your payments on time and do not have any rent collections, this is the first good indicator that you are well on your way to being ready to own a home! A rent collection on your credit score can disqualify you from being approved for a home loan without a reasonable explanation and a signed statement from your previous landlord stating you no longer owe anything. Lenders typically are not concerned with rent collections that are over a year old.
You Are Tired of Paying Rent
As rent rates rapidly increase, you may feel increasingly frustrated with rent. The money you put towards rent is money you will never see again, whereas the money you put toward a mortgage is going toward equity in your home, which you own, and can capitalize on later.
You Have Job Security
If you have an excellent work history and job security, then now is a good time to purchase a home! Mortgage lenders are looking for at least 2 years of consistent work history in the same or related fields with demonstrated increased income over time.
You Are Ready to Live in One Place For a While
If you are someone who moves frequently, then homeownership may not be for you, unless you are looking to purchase an investment property. But if you know you have found the place you want to live for several years, then now might be the right time to purchase a home.
Your Credit is in Good Shape
If you have a good credit history and credit score, then now is a good time to purchase a home! Don’t get too worried though if your credit is less-than-perfect. There are a lot of steps you can take to improve your credit score and there are a lot of home loan options available for homebuyers with lower credit scores.
You Know How Much House You Can Afford
Before trying to enter the housing market, get an idea of how much house you can afford. One easy way to do this is to look at how much you are paying for rent and utilities and from your current budget, determine how much of a mortgage payment you could afford. Websites where you can browse inventory, like Zillow and Realtor.com, typically include a mortgage payment estimate.
Take this number with a grain of salt as there are many factors that could make your mortgage payment more or less than the estimated payment. Still, this can be a helpful number to recognize what houses are completely out of your price range and which ones will fit into your budget.
If you are purchasing a home with a government-backed loan (VA, FHA, or USDA), you may be subject to 2022 loan limits. For VA loans, loan limits do not apply to qualifying veterans and servicemembers with full entitlement.
You Have Savings for a Down Payment and Closing Costs
When you know how much house you can afford, you will also have a better picture of what you will need to save to cover the cost of a down payment and other closing costs. A down payment can cost anywhere from 0% to 20% or more of the amount of the mortgage loan, depending on what type of mortgage you are using to purchase your home.
Other closing costs can cost anywhere from 3% to 6% of the amount of the mortgage loan. This means if you are purchasing a home for $300,000, you could need anywhere from $0.00 to $60,000 saved for a down payment and $9,000 to $18,000 saved to cover any other upfront closing costs.
You Understand the Buying Process
Finally, before you begin the home purchase process, it’s important to understand the buying process. A simple breakdown of the home purchasing process involves:
- Finding a lender.
- Getting pre-approved.
- Finding a realtor.
- Shop for a home and go under contract.
- Complete the loan approval process.
- Close on your home!
You never want to jump into the home-buying process blind. Fortunately, we are here to help you get as prepared as possible!
Ready to Get Started?
Are you ready to be a homeowner? VeteransLoans.com is a VA-approved lender that offers conventional, FHA, and VA loan products. Call 1 (888) 232-1428 to speak with a loan specialist today and get started!