Becoming a first time home buyer and walking in the doors of your very own home has always been the American dream. It confirms inside yourself that you’ve reached a level of success in your life. You finally have the keys to open the door to your very first home!
But how do you know if you’re really ready to take the big step to become a first time home buyer There’s no need to worry. It’s pretty simple to tell if a person is ready to buy a home – or not ready for that matter.
Several years back during the housing crisis, many homeowners lost their homes to foreclosure. In the wake of that horrible season, we all learned some valuable lessons. One of which was that many of those who did lose their homes, simply weren’t ready to be homeowners in the first place. Sad but true.
Let’s learn from those mistakes and decide today to make better choices. And part of making better choices is self-evaluation. In order to get where you want to go; you need to first know where you are.
If you’re looking at a road map or even getting directions from your phone; you need to have a starting location or else you can’t possibly know which way to go.
Use the following signs as a means to find your starting location. These points will help you see if you’re in a good place for buying a home and certainly give you your starting point.
Find Your Starting Location
Sign #1: You have steady income and employment
In order to be ready for your monthly mortgage payments, taxes, insurance, and other expenses; you must have steady and reliable income. A lender will not have confidence in a person’s ability to pay back their loan if they aren’t able to show they’re responsible to get and keep a job for a significant length of time.
Sign #2: You will be living in your current city for the next few years
If you work in a profession that constantly requires you to be relocated to another city or state; home ownership may not be the best option for you until your living situation becomes more permanent.
Sign #3: You have an established and favorable credit record
Gone are the days of the low document home loans that don’t require extensive proof of income and credit documents. You must show that you are a reliable consumer who pays his bills every month and on time. If your credit is or has been an issue for you; it’s not too late to save it.
You need to start by pulling your credit report from all three bureaus. You can order one free tri-bureau report a year through annualcreditreport.com. Once you have your credit report in hand, you can see a true picture of not only your scores but the actual credit items on your report. You can begin making a plan to dispute any false or duplicate charges, and pay off those legitimate ones. It’s never too late to bring your credit back to life. Little by little, it will make a tremendous difference.
Sign #4: You have at least 3 months of income saved for the unexpected
Savings is essential for keeping a successful home. Dave Ramsey with Financial Peace University calls savings Murphy Repellent. When you have money ready for the unexpected; it seems like the unexpected rarely comes. Not only that, but when trouble or annoying issues do show up; you can take a loan from your own savings instead of a bank. Getting loans from the Bank of You is great because you always get approved and all loans are interest free! Just be sure to act with integrity by paying yourself back just like you would with a bank.
Sign #5: You live a budgeted life
You don’t need to live off an extremely restrictive budget, but you must have a clear understanding of where your money is going each and every month and are sure you always have enough in store. Having a plan for your money (a budget) means all your money has a place. It’s just like in your home. If everything has a place and it all goes to its place on a fairly regular basis; your home will flow and be more organized – instead of overrun by clutter. Budgeting keeps the clutter out of your finances and keeps things flowing.
Now, that you know where you are; you can make a wiser decision on where you need to go next.
If you are reading this and feel confident that you are in a good place to become a first time home buyer; contact us today! We are dedicated to helping first time home buyers get qualified to make home ownership a reality.