Tips for the First Time Home Buyer: How to Know When You Are Ready

As a first time home buyer, there are usually many questions that you might not understand. Buying a house is a very big step and the first time you do it, it can seem overwhelming. Knowing when you are ready to get involved is essential. Here are a few things to think about when trying to decide if you are ready to buy a house.

Steady Income

One of the biggest things that you need to determine before you buy a house is the steadiness of your income. Look at your current financial situation and ask yourself whether or not you could afford a mortgage payment. Do not just look at this particular month and see if you could afford it. Look at the last several months and years to determine if you make enough money.

One mistake that many people make is that they make their decision based upon future circumstances. They think that they will be getting a raise in the near future, so they go ahead and buy the house now. Do not ever make a decision based on possible future events. Before you agree to a 30-year mortgage, you need to determine whether you can afford it on your present salary. You never know when things will happen, so you need to not plan too far into the future.

Pay Down Debt

Besides determining whether or not your current financial situation is good, you also need to look at your debt situation. Many first time home buyers jump into a mortgage before they have their debt under control. When you have a large amount of credit card debt, you should not get yourself further into debt with a mortgage. Establish a plan to pay down your credit card debt.

Start by establishing a realistic timeframe for paying off the debt. Then, make systemic large payments that will wipe out the debt. Practicing this type of self-discipline will help jump start you for a mortgage payment, since they are typically more expensive than rent.

When Rent is Easy

Another way to tell if you are ready for your first home is when the rent payment starts to get easy. In most cases, your mortgage will be higher than what you are used to with your rent payment. If you cannot afford your monthly rent payment comfortably, then you are probably not yet ready for a mortgage payment. In addition to a higher payment, you will also have to come up with the money for insurance and taxes on the property. This will often be added into the monthly mortgage payment, which will make it even higher. Just make sure that you are very comfortable with rent before you go too much farther with your ideas of getting a mortgage.

Another tactic to use to get ready for a mortgage is to start paying the amount of the mortgage you may think you are ready for. Pay a portion to rent, and put the rest in a savings account. Then, once you buy the home you are interested in, you can use the money for your home repairs or furniture.