How do you know if you are financially ready to buy a home? Many people find themselves looking to buy specifically because of the old saying that “renting is throwing money away.” Although there are situations and locations where that may be true, it is not always the case. It is important to do the math of renting vs. buying for your area.
Another thing that is smart to consider is having a back up financial plan in case you run into a hardship such as losing your job. Don’t max out your budget, your job, or the well being of your family just to be able to make a mortgage payment. You want to leave room in your budget for those emergencies.
One thing that can get people into financial trouble is only budgeting for the mortgage payment itself. Owning a home requires more financial responsibility than just the mortgage payment itself. Make sure to consider the cost of utilities, maintenance and repairs on the home, housing and property taxes, and fees during the purchasing process such as home inspection and realtor fees.
Having a savings set aside (not to include your down payment) is a great way to make sure that you are taken care of in case of emergencies or unexpected expenses. It is recommended to have 50% savings towards your down payment and 50% left in savings.
Hopefully this gives you some guidance when it comes to financially being ready to purchase a home. A home can be a wonderful investment when well thought out and planned for! Make sure that you get your best benefit by hiring a realtor to guide you in the right direction.