Assessing Your Readiness to Own a House

Couple in Front of Their New House

One benefit of buying a house is having a property that is yours, which then lets you do whatever you want with it. This is not possible with renting, as you are always restricted and you need permission before you can make changes to the house.

There are many other benefits, but buying house for the first time can be overwhelming. In order to navigate the process smoothly, you must determine if you are ready to own a house.

Affordability Issues

Mortgage lenders in Phoenix note that before you start looking for potential houses, it is advisable to determine what you can afford. If you can’t afford the houses in the neighborhood you want to live in, you should be willing to compromise or choose another neighborhood. If you’re not willing to make such sacrifices, it is better to save first.

Cash Reserves

Buying a house involves paying for the down payment or the mortgage’s closing costs. If your savings are limited, it may better to save more first. If you have a sizeable cash reserves, paying for a down payment may not be a big challenge. Note that paying a bigger down (more than 20%) helps you build equity faster and avoid private mortgage insurance (PMI).

Financial Stability

Having a steady job or stable source of income is important if you’re financing a house with mortgage. This is because you have to pay the loan every month. Lenders prefer borrowers with the ability to pay mortgage and keep up with other obligations. Your job, furthermore, should not require you to travel frequently or move to another city.

Credit Rating

A high credit score means that you’re financially responsible and can take another obligation, such as buying a house and making monthly payments. If you have maxed out your credit cards or have missed payments, it is best to fix your credit rating first before applying for a mortgage. Note that a good score also increases your chances of qualifying for a lower rate.

If you think you’re ready, learn more about the home buying process. Work with a reliable lender to learn more about your loan options.