5 Questions That Can Tell You Whether You’re Ready to Buy a Home

 

Before you start searching for your dream house, ask yourself: 

• Can I qualify for a mortgage? 
• Can I afford closing costs plus a down payment?
• Can I afford insurance and property taxes?
• Is this a long-term plan? Can I handle home maintenance?

Can I Qualify for a Mortgage?

If you’re like most people, you’ll need to take out a mortgage loan to buy a home – and for that, you’ll need to qualify. Your best bet is to start talking to lenders to see how much money you qualify to borrow and what types of rates you may get. To qualify for a mortgage, you generally need job stability, a solid credit history, and some money in savings (for your down payment).

Can I Afford Closing Costs Plus a Down Payment? 

Your down payment isn’t the only cash you need to come up with to buy a house. You’ll also be responsible for closing costs (unless you can get the seller to pay some or all of them). You’ll have to pay for home inspections, appraisals, and a variety of other fees, which can total 3 percent (or more) of the home’s total purchase price.

Can I Afford Insurance and Property Taxes?

If you have a mortgage, your lender will require you to carry homeowners insurance. You’ll also be responsible for paying for property taxes each year. Sometimes both these costs can be rolled into your mortgage, but if they’re not, you’ll have to stash away cash to pay the bills when they’re due.

Is This a Long-Term Plan?

Buying a house should be a long-term (or at least not a very short-term) plan. That’s because if you buy a house today and try to sell it in a few years, you probably won’t have built enough equity in it to make a profit. In fact, you could even lose money on the deal.

Can I Handle Home Maintenance?

Owning a home means that you’re responsible for maintenance, whether something breaks or needs to be updated. Maintenance can get expensive, too; you have to think about things like shoveling snow and cutting the grass, as well as emergency repairs.