How can one determine whether or not you’re ready for a home purchase? While it’s part of the American Dream, there are many things to consider before you can safely say you’re prepared to buy a house. Just because there are lots of affordable options out in the market today, you can already jump into the pool of first-time homeowner wannabes. There are lots of factors to consider – not just the low down payment fees and interest rates.
Here are five signs that tell you you’re ready for a home purchase this 2019.
Your Debt-To-Income Ratio is kept to a minimum
If you plan on a home purchase with the help of a home loan, then keep in mind that you’ll need to show that you’re able to pay on time. Various mortgage types are available for first-time homebuyers – one of which are FHA loans Texas. You’ll need to have a DTI Ratio between 31%-41% only to qualify for an FHA mortgage, not to mention other requirements needed to get approved.
Your Credit Report is free from error, and you have a high credit score
Your credit report shows all of your past credits from different sources, your current dues your credit activities and situation. So, make sure there are no errors and to file a dispute if you find any. Your credit score is a number your lender will check to see how much of a good payer you are. Make sure you pay your dues on time, to refrain from applying for new credits and to avoid expensive buys before getting approved for a home loan.
You have a steady flow of income
Job stability is essential for a home loan application as it shows you have a steady flow of income. One needs to prove to your lender that you’re capable of paying them back by staying on a good-paying job for at least 24 months. Why? They usually ask for two years worth of proof of income. So, make sure you stay on your job and to list all of your income sources.
You have enough cash to pay for down payment and more stored at your savings account
One also needs to have not just a significant amount of savings, but enough money to pay for the down payment. While some home loans allow little to no down payment, it would be best to save up both for your DP, savings and emergency funds. Your savings should be different from your emergency funds as you’ll need a separate amount of money in case if emergencies, house maintenance, and repairs, etc.
Good Read: 8 Reasons You Need an Emergency Fund
You plan on living in that home for more than five years
If you have no plans of transferring to a new home, state or country for the next few years, then you’re ready to buy a house. A home purchase is an investment and a long-term commitment. Since most home loans can last up to 30 years or more, you’d need to stay long-term so that you won’t lose your investment.