Renting out vs. buying a new house is a major debate in most households. Some people believe renting is equivalent to throwing money down the drain, and it’s simply wiser to put those funds into your own home. On the other hand, people often aren’t willing to give up the flexibility of renting out a place. They don’t wish to be tied down to one house.
While both the arguments work for different kinds of people, we personally prefer the stability that comes with being a homeowner. If you’re like us and wondering if it may be time for you to buy a new house, you’ve come to the right place!
Here are the most prominent signs that will tell you if you’re ready to stop renting and buy your own home.
1. You Have a Steady Job
The first and most important thing to consider is your monthly income and how stable your finances are. If you’ve been at your job for a while, with no plans of switching, then you’re probably ready to consider buying a new home.
Steady employment is an essential ingredient to becoming a homeowner. It offers you the reassurance you need before taking the plunge. Moreover, mortgage companies thoroughly investigate your finances and employment history before clearing your out for the loan. Most look for a steady paycheck dating back to two years at least.
2. You Have Enough Saved Up for the Down Payment
The reason why so many people opt to rent out instead of investing in their own houses is that they don’t have enough saved up to meet the down payment. If your monthly income allows for steady savings, it means you’re in the right position to start looking at St. Louis Park houses for sale.
If your savings have collected up over the years and you have sufficient funds to make the down payment, what are you waiting for? According to the Federal Housing Administration, you only need 3.5% of the home’s purchase price as your mortgage. Don’t renew your lease this term, and instead put in your savings to get your own home!
3. The Interest Rates are at an Attractive Level
A rather clever way to determine if it’s the right time to buy your own house is by looking at the current interest rates. While the prices of different properties matter a lot, it is the interest rates that bring the cost up the most. So, be on the lookout for a dip in the interest rates, and as soon as they hit a low, you know it’s time to buy!
Since interest rates are prone to quick ups and downs, it is best to strike fast when they’re at a low, as chances are they will get right back up soon.
4. You’ve Been Managing Your Debt Well
Moneylenders are known to go over your debt history and determine how likely you are to pay off your mortgage before approving you for a loan. If you’ve been managing your debt well for the past few years, you’re likely to be cleared off instantly!
In general, lenders prefer people with a 40% or lower debt to income ratio. You can easily calculate your ratio by summing together all the monthly loans and dividing the total with your monthly income. If you end up with a DTI higher than 50%, a great tip to lower it is paying off some of your credit card debts!
5. Your Credit Score is Impressive
One of the major reasons why renters fail to take the leap into buying their own homes is because of a low credit score. When your credit score is high, it means that you can borrow more money that will eventually be paid off with interest over the next few years. A good credit score also gets you better interest rates and some leniency if you miss out on a payment or two.
If your credit score is over 650, you’re in a good position to buy your own home. However, it should be noted that even people with a somewhat low score of around 500 can apply for a loan and start looking into houses for sale in Excelsior MN.
6. You Have the Perfect Neighborhood in Mind
Lastly, if you find yourself thinking back to that perfect neighborhood you drove past a few weeks ago, it is a huge indication that you’re ready!
If you have been considering good neighborhoods to settle down in and perhaps raise a family that is your subconscious telling you it’s time to buy your own home. It could be because a particular property caught your eye, and you immediately fell in love. Or maybe you just noticed that this area has all the amenities you and your house members will need nearby.
Whatever the case may be, it’s time to do some more scouring and find the best home for yourself!
Time to Move to Your New Home
There you have it, all the signs pointing you towards buying your own home ASAP. Going from being a renter for years to becoming a homeowner can be a huge step. It will require immaculate planning of your finances and various other factors. However, once you make it, it can be a truly rewarding step in the right direction for your future. All the best!