One of the most important financial decisions you'll ever make is buying your first house. Make sure you do as much research as possible and consult with friends and family before taking the final decision. Let’s move on our topic-8 Signs You're Ready To Buy a House to provide a quick checklist of the important signs which indicates that you’re ready to buy a property.
You've Considered ALL of the Costs of Home Ownership
Owning a home entails far more than just making a monthly mortgage payment. Utilities (gas, electric, water), cable, internet, and waste are just a few of the extra costs which every one of us has to consider. Transaction charges, repairs, and property insurance are all included in the cost of purchasing a home. It's critical that you know how much it costs to buy a home before you decide to pay off your student loans and buy a house!
If your debt-to-income ratio is high.
Mortgage lenders will look at your credit history and current debt levels, including school loans, credit card debt, vehicle loans, and other types of debt, when you apply for a mortgage. Before taking on the burden of house ownership, you should assess your own debt levels. Check out this debt-to-income ratio calculator for instructions on how to determine your debt-to-income ratio.
The Interest Rates on Your Student Loans Are Low
Many people believe that obtaining a college degree without incurring debt is unattainable. When it comes to borrowing money, it's preferable to exhaust all federal options before taking out a private loan. The majority of government loans have an interest rate of 3.5-7 percent, however payback lengths vary.
The following are some of the most popular forms of loans:
- Direct Plus Loans — Graduate and professional students, as well as parents of dependent undergraduate college or career students, are eligible for these loans.
- Direct Subsidized Loans - These loans are available to students who can demonstrate financial necessity. These loans have a 6-month grace period and do not accrue interest until after graduation.
- Direct Unsubsidized Loans — These loans are available to students who can demonstrate financial necessity. While the student is in school, these loans accrue interest.
If you have a debt with an interest rate of 6% or greater, experts recommend paying it off. If you have a loan with an interest rate of 5% or less, it can be a good idea to diversify your portfolio.
There's No Way You're Leaving Anytime Soon
Buying a home is worthwhile if you have a solid career in a city you enjoy. If you're not sure where your work will take you in the next few years, though, you should hold off on making a buy. As a starting point, consider few years. According to experts, most homes require at least five years to break even. You'll be paying largely interest on your property for the first several years of ownership, rather than the principal.
You have a stable income source.
Individuals in some industries will have varying sources of income. Salary fluctuations are common in commission-based companies. It's critical to have a consistent income stream before paying off student loans in order to buy a property. Many mortgage products will make this a requirement in order to be authorized for a loan.
You Maintain a Healthy Credit Score
The best mortgages require excellent credit scores. However, if your credit score is below 740, you may want to wait on purchasing a home. If your credit score was to take a dip from ignoring your student loan debt in favour of your mortgage, then reconsider purchasing a home for now.
You Have An Emergency Fund
Experts advise having an emergency fund with about three to six months’ worth of income. In addition, take into account that your emergency fund should increase once you own a home. In the event that you were unable to afford mortgage payments, you would need a backup plan.
You have a good gut feeling about something.
Above all the above signs the most important is your gut instinct that will guide you to the correct decision. If you're being pushed into buying a property by a new marriage, familial pressure, or societal expectations, think once again about whether you really want to or not.
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