Pay attention to these seven signs that reveal you might not be ready to buy.
You don’t make enough money – You might think you do but crunch the numbers first. You will want to make sure you have enough upfront money as well as on-going money. Upfront money is your down payment and closing cost. Buyers should figure about 1% to 1.5% for closing costs and at least 5% minimum down for a conventional loan and 3.5% for a FHA loan. Your on-going money needs to be enough to cover the monthly principle, interest, taxes and insurance on the property. This should be no more than about 28% of your income according to financial planners.
You have too much debt – okay, so you have enough to cover step one above. Let’s take a look at your debt. If you have maxed out all your credit cards, you may want to get them under control before owning a home. Lenders typically want your total debt load which would include your monthly mortgage payment to be 36% or less of gross income.
You don’t have enough savings – if you have saved for the down payment and closing costs – congratulations! That is one hurdle you made it over. What if your home needs an emergency repair? Would you have the money to fix it. You will want to save for the unexpected things that could happen like your air conditioner dies on a hot sweltering holiday weekend or a pipe could burst. Let’s also not forget about moving costs and any new furnishings you may need to decorate the new place.
You haven’t been on the job long enough – Most mortgage lenders like to see that you’ve been working the same job for at least two years. Being on a job for that length of time or longer shows stability. A changing in jobs or having income gaps signals instability.
You have poor (or no) credit – a bad score can indicate some sort of financial problem. A mortgage lender may have questions about payment history and may make some suggestions to improve your score. If it takes longer than six months to fix, you might not be ready to buy just yet. Having little or no credit history can also be a problem. Types of credit mortgage lenders will look at are rental history, car insurance, car payments, revolving credit history. They are looking for a pattern of good payment history with companies for 12 months or longer.
You are not sure what type of home you want – you might think you want a single family home, but you have options. Ever consider buying a duplex, living in one side of it and renting out the other for income? Perhaps a condo or townhouse might better suite your needs by providing a lock it and leave it lifestyle. It is hard to say I am ready to buy if you do not know what you want.
You are not ready to stick around – If you buy a house and have to sell the next year, you’re likely to lose money. Unless you can stay in the home for the next three to five years, you are not ready to buy. It typically takes that long to recoup the closing costs and post purchases expenses through appreciation of the home.
If you think you are ready to buy or would like to have a conversation about buying, click here to connect.
Author:Victoria Thompson Phone: 913-707-1011 Dated: February 12th 2018 Views: 315 About Victoria: Victoria Thompson has collectively lived in the Dallas area for over a decade, having recently moved...
View our latest blog posts in your RSS reader. Click here to access.
Steve Rigely was born and raised in San Antonio, Texas. He moved to Dallas in 1998 to attend Texas Christian University. He graduated from TCU with a BA in History and a minor in Business.
Steve’s passion for helping people and his business savvy helped guide him to residential real estate in 2003.
“Real estate just felt right. After connecting all the dots, I knew that my career was in residential real estate. I loved the idea that I don’t have any limitations and every day is different than the last.”
Since starting his career, Steve has worked to build lasting relationships with his clients and prides himself in being resourceful in today’s evolving economy. Steve strives to treat each of his clients with the same consideration and revere.
Being able to see Dallas transform has been quite the experience for Steve. Being one of Victory Park’s first residents has given Steve a great platform when it comes time to try to win a potential client’s business.
“I’ve been fortunate to have lived in some of Dallas’ most unique neighborhoods. Uptown and Victory Park have been my home for quite a while now and I am still in amazement at the amount of growth and business opportunity that has been created in just a few short years. I have loved being in the heart of the action.”
Steve took his career to the next level when he joined Rogers Healy and Associates in 2009. Whether you are buying, selling, investing, or just need advice, Steve looks forward to working for you.