Buying a home is a big decision for everyone, it’s related to both for your future and your finances.
But, not everyone is able to buy a house for their own, knowing your affordability is very important before decide to bear this kind of long-life debt. Besides, knowing if you are ready upgrade yourself to a homwowner comes down to much more than a number in the banks.
If you’ve been saving up for some years, but not sure whether you’re both mentally and financially are ready to start the buy house process, here are 9 signs show you are ready to buy your first house.
① Your saving is more than the minimum for a down payment
Unforeseen expenses always float off on the table, when buying a home. Closing costs alone, which can include anything from inspection fees to title insurance, can add an additional 5% to the final price of the home. Therefore, it’s better to have a cushion on your down payment.
First-time homebuyers are most likely to exceed the initial budget they set when buying a home, plus the home buying process itself is complicated enough without having financial difficulties. Hence, the number of your saving must higher than the minimum for a down payment of the home that you’re going to buy.
② You have another saving for emergency use
As the expert say, when buying a home, the more you have in savings, the better. But, the emergency fund should not include in the account that you save for a down payment.
But, most of the first-time homebuyers will have money saved and they end up putting the entire amount toward the down payment to afford the home, and have no money leftover. There are always added expenses when buying a house, from simple repairs to fill in the furniture, and you are soon to spend all your saving.
③ You having a good credit score
Your credit score is extremely important when comes to applying a bank loan. Your credit score will determine if you can get your loan approved and get the good interest rate. A bad credit score mean significantly higher monthly repayments, which puts an obvious stress on your budget. Credit score can fluctuate, so it’s better to check it early in the home buying process. It it’s not in a good range, take some time to work on building it up.
④ You know when to step away
Go into any negotiations with more than the bare minimum down payment ready, but know when to step away when the final price tag of a home is exceed your originally anticipated. When buying a home, you must stick with the budget that you’ve set earlier even how the offer attractive is.
⑤ You don’t have other huge expenses
If you don’t have any other huge expenses, it will be easier to make paying off your house loan a priority. For example, if you can afford mortgage payment of RM 1,000 a month right now, but you plan to have a baby next year, will you still be able to afford the same amount? If not, it’s time to choose your priorities.
⑥ You’re not plan to move in the next 5 years
If you are only going to live in an area for a short period of time, it’s better to renting. If you are planning to settle in and stay for at least 5 years, it makes financial sense to buy a home. But if you don’t see yourself putting down roots for more than 5 years, it could be a waste of your time and money.
⑦ You understand your own finance
Property agents, financial planners and mortgage brokers are useful resources to turn to in the house-buying process. However, don’t completely rely on them to know what is best for your personal financial situation.
Even though you’re saving is higher than a down payment, but you will need to consider if you can afford the monthly loan repayment. It is very important that you calculate on your own as you might have spending preferences that a lender wouldn’t take into consideration.
⑧ You keep your debts under control
Don’t feel like you must be debt free before you can buy a house. If you currently bearing the debts, do a deep dive into why you would have debt and how you are planning to work with it.
If you are still on-track to pay off your student loans, you are probably in the clear to take on a big purchase like a house, but if your credit card debt is increasing, that’s mean a red flag and you shouldn’t proceed the step of buying a house.
⑨ You’re buying a house for the right reasons
If you buying a house simple because you think you are wasting money on rent or because it’s a good investment, apparently you are not be mentally prepared for all the responsibilities that come with home ownership. If you insist doing so, at the end of the day, this home will make you bankrupt and not making you rich.
It’s smarter to look for a house that meets non-monetary goals: It’s in your dream neighborhood or it’s a good place to start a family. If the above signs are pointing at you, means you are ready to buy your first house.