5 Signs That It’s Time To Think About Buying A Home

Whether you’ve been renting for a few months or a few years, you may reach the point where you wonder about buying a place. You’ll have a place to call your very own, and instead of paying rent every month, you’ll be making a payment on a place you own.

Buying a home is a huge decision, and for most people, it’s the biggest purchase of their lives. Here are a few signs that you’re ready to go from renting to buying.

You’re Financially Stable

The first thing you should do is evaluate your current financial situation. You should already have an emergency fund that will cover your expenses for three to six months, steady income, and minimal debt. Student loan debt is fine, but if you have credit card debt, paying that off should be your first priority.

You will need to have money saved for a down payment on the home. Aim to save at least 5 percent of the purchase price for your future home, although 10 to 20 percent is even better. With a larger down payment, you’ll be able to get a better deal on your loan.

You can also keep your annual percentage rate (APR) to a minimum with a high credit score. Check your score with the three major credit bureaus. Aim for at least a 700, although 800 is even better.

Estimate how much your loan payment would be and substitute that amount for your current rent payment in your monthly budget. If you find that you’re making more than enough to cover a home payment, then you’re in a good position to buy.

You Want More Control

When you rent, you’re limited as far as what you can change in your home. Your lease will outline what you can and can’t do, but even if you’re able to improve something, do you want to spend money upgrading a place that you don’t own?

If you find yourself wanting to make changes to your home, then it may be time to consider buying. You’ll be able to change the floors, paint the walls, remodel, and do whatever else you want. Just keep in mind that you’ll also need to handle the less glamorous aspects of home maintenance, including repairs. The good news with handling repairs on your own is that even though you’ll be paying for them out of pocket, you aren’t at the mercy of a landlord who may not consider those repairs as much of a priority as you do.

It’s a Better Deal

You also need to consider the market where you live. The cost of renting and buying a home fluctuates, so there are times when it’s better financially to buy. Of course, the best time to buy a home is when home prices are low and rental prices are high, but this is an ideal scenario for a homebuyer.

To determine if renting or buying is a better deal, figure out how long you plan to stay in your next home, and then compare the cost of buying to the cost of renting for that time period, along with how much equity you’d build in the home.

It’s the Right Move for Your Family

If you have kids or are planning to have them in the near future, then you may want to buy a home so that they have a stable environment where they can grow up. You won’t need to worry about moving and your children switching schools.

By purchasing a home, you will also have property that you can pass down to your children.

You Love the Area

If you frequently find yourself suffering from wanderlust and your dream is to travel as much as you can, it’s best to hold off on buying a home. You also don’t want to buy a home if you aren’t completely sure that the neighborhood is somewhere that you would love to live for at least the next 10 years.

Buying your first home is exciting, and it’s a big transition when you’ve been renting for your entire adult life. Assess your current situation and how much you like your neighborhood so you can be sure that buying is right for you.

Photo: Dan Moyle / CC 2.0