Are you one of the many millennials (born between 1981-1997) who sees your friends jumping into the real estate market? Are you wondering if now is the right time for you to buy a house? Here are a few things to consider first.
What are your finances like? Consider your financial state the most significant factor in understanding whether homeownership is right for you. With college tuition costs booming and small businesses not finding enough qualified workers, maintaining a healthy financial diet is increasingly difficult.
There are two questions you must ask yourself regarding your finances:
- Do I have money tucked away for my down payment? Putting down at minimum 25% of the cost of your home will help you steer clear of paying private mortgage insurance, (PMI). Buying a home without a down payment is not a smart decision for you or the bank; you might end up owing more money than the home’s initial cost if its property value declines.
- Will I be able to pay my mortgage? Think about your current and future mortgage payments before you sign the dotted line. Choose a fixed-rate mortgage so your loan payments won’t change. In contrast, if you chose an adjustable rate mortgage, you might be able to pay your payments now, but you might not be able to afford it later on. Adjustable rate mortgages sometimes have an adverse effect on American homeowners.
Your Credit Score
Your credit score documents your history of how well you paid off your credit debt and charges. Lenders check your score to gauge whether you will pay them back going forward. Start building credit and establish at least one full year of good credit use to show lenders you can handle house payments.
Want to learn more about what to do before you buy your first property? Click here to read more.