Am I ready to buy a home? It’s a question many potential first-time homebuyers ask themselves every day. It does not necessarily matter what is going on with the market or interest rates. What matters is what is going on in your life. Are your finances in order? Are you ready for the responsibility? Is your life stable enough to put down roots? Here are some ways you can tell if you are ready to buy a home:
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How much of a mortgage can you afford?
The Federal Housing Administration and many lenders use a rule called debt-to-income ratio to determine whether a person can afford a mortgage and how much mortgage he or she can afford. In order to calculate the amount, you take your total monthly debts, ranging from car to credit card payments and your total monthly income. You divide the debt total by your monthly income to determine what your ratio is. If your number is 43 percent or higher, you could possibly afford a home.
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How much money have you saved?
You don’t have to have much of a down payment when you buy a home these days (usually just 3.5 percent), but the more you can put down on a house, the less interest you pay in the long run. So, if you have some money saved up, great. But do not forget the other costs like furniture, repairs, inspections, insurance, utility deposits, homeowner’s association fees, and property taxes. Some of that down payment money will need to be spent on those.
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Are you ready for a long-term investment?
If you live and work in Atlanta, but you have plans to transfer to the Charlotte branch of your company next year, you may want to skip buying a home and save your money for a home in your new city … unless you plan to greatly increase the value somehow, rent it out when you move or make the daily four-hour commute to Charlotte. If you do move to another city, you may end up losing money by reselling so quickly without an increase in value, or you may end up stuck with a house that you do not really want or need.
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Are you ready for the responsibility?
Buying a house is not all about planting flowers in the yard and painting the kitchen walls. It is a major investment and responsibility. Pipes bust, septic tanks need to be replaced, the roof leaks and trees fall. Unless you are incredibly handy, you will need to have the cash and know-how to hire someone to take care of all the problems that arise while you live there.
If you think you are ready to buy a home, contact Atlanta Fine Homes Sotheby’s International Realty at 404.237.5000.