Buying a house is a big financial commitment, and probably the largest investment you’ll ever make. If you’re contemplating condo renting versus owning a home, perhaps leaning toward the latter, but you’re not sure if you’re ready to buy a house, some sure signs can help you feel more comfortable with your decision.
You’re Ready to Put Down Roots
If you’re ready to put down roots and know you want to stay in the same place for at least a few years, buying a house might be a good option. Renting is a good idea if you want to try out several different neighbourhoods before committing.
You Have Good Credit
While your credit doesn’t have to be perfect to get approved for a mortgage loan, your credit score should be at least 640, and the higher, the better. Your odds of getting approved, and a lower interest rate, improve the better your score is. Anything above 720 is considered excellent, so if it’s lower than that, you might want to hold off and work on improving it first. If you aren’t sure what your credit score is, you can check online through various sites. The major credit reporting agencies, Equifax, TransUnion, and Experian, all provide free annual credit reports, but not scores. You can get your credit score for free through some credit card companies and sites like Credit Karma or NerdWallet, as thelendersnetwork.com notes.
You Can Afford the Monthly Mortgage Payment
Of course, no matter how high your credit score is, you’ll have to be able to afford the monthly mortgage payment. The amount of home you’ll qualify for is linked to your debt-to-income ratio, which is generally recommended to be below 37%. If you can’t afford to buy a home in your desired neighbourhood, but living there is a must, you might want to stick with renting. Before you decide to buy, be sure that you have a good idea of what you can actually afford.
Your Employment is Steady
If you’ve been working for the same company for two or more years, you’re more likely to be seen as financially stable, so it will be much easier to get approved for a mortgage loan.
You’re Prepared for the Maintenance and Repair Expenses
Taking care of a home can take a lot of money, and a lot of hard work. When you’re renting, the owner takes on that responsibility, but when you own, you’ll have to make sure your home is well-maintained, ensuring everything from roof repairs to pipe leaks are appropriately taken care of. While you might be able to handle some of the smaller jobs yourself, when more significant problems arise (and they inevitably do), you’ll need to pay for professional help, which can be quite pricey. Something you may be able to consider to minimize that financial stress is getting a home warranty plan which would cover many types of repairs for a fixed monthly cost.