3 Signs that Indicate You Are Ready to Buy a Home

Most people who are renters or want to move to a bigger or smaller home find it confusing if not daunting as to whether it is the right time to make a move.

So, here are 3 signs that can guide you as to whether you are ready to buy a home or not:

#1: Have the Money for Closing Costs and a Down Payment

One of the easiest ways to know whether it’s the right time to buy a home is if you have the money for both closing costs and a down payment. The down payment can range from 2 to 20% of the property value while the closing costs vary from 2-7 percent. In the case where your down payment is less than 20 percent, you’ll have to obtain Private Mortgage Insurance (PMI). When you apply for a mortgage, your lender will give you these figures.

#2: Aware of How Much You Can Afford

According to Freddie Mac, your monthly mortgage payments must be a quarter of your gross monthly income. What is also taken into consideration is the amount of debt you have accrued and your credit history. Usually, your debt should not be more than 30 to 40 percent of your gross income. Both these factors will determine how much you can borrow.

#3: Your Credit is in Good Shape & Your Credit Report is Accurate

Before you approach a lender, you should be aware that they will look at your credit history and whether it is in good shape or not – how much debt you have accumulated and whether your payments have been made on time.

Check your credit score by requesting for reports from all three credit reporting companies namely Experian, Equifax and Trans Union.