Home ownership is a big step, both physically and financially. Before you decide to purchase your first home, you want to be sure that you’re financially ready for everything it entails. These signs will let you know that you’re ready to take that step in your life.
If you’re thinking about home ownership, it should probably be because you’re planning to stay in one place for a reasonable amount of time. As a military service member or dependent, you may expect to move fairly regularly. A house can be a solid investment even if you know you’ll need to sell it and move within a couple of years. On the other hand, if you know that you’ll be at a post for only a couple of months, renting may be a better choice for you.
Before you purchase a house, most lenders will want a down payment–generally around 20% of the initial cost of the house. While there are options available that will allow you to put less down, you may pay more in interest as a result. Saving up for a down payment is also the perfect time to assess whether you are ready for the commitment of home ownership.
If your income is about to undergo a drastic change–you’re thinking about getting out of the military, for example–you may not want to jump into buying a home right now. Massive changes in income can leave you struggling to take care of the financial responsibilities that go along with home ownership. On the other hand, if you know you’ll be staying in the same job for a while (or only expect your income to grow for the foreseeable future) then you’re probably in a better place to go ahead and buy that home you’ve been considering.
Budgeting for home ownership is about more than just paying the mortgage. You’ll also need to take care of your homeowner’s insurance and factor in needed maintenance throughout the house and grounds. Do you plan to live in a homeowner’s association? Most associations carry their own fees, and they can be a significant financial burden. Write a budget that includes the hidden costs of home ownership to ensure that you are genuinely ready to take this important step. Writing out your budget can also be an important step in determining what you will need to change between your “dream home” and the reality that you can actually afford.
Getting a home loan with poor credit may mean that you pay substantial fees in the form of extra interest. You may also need a larger down payment before a lender will consider taking a chance on you. Before diving in and buying a home, take the time to fix up your credit. Make sure that you have a reasonable debt to income ratio by paying down as much of your debt as you can, and make all of your other payments on time for the foreseeable future. You’ll quickly find that taking a few months (or even an extra year) now to repair your credit can make a big difference in what you will pay overtime to become a homeowner.
Are you ready to take the plunge and become a homeowner? We’re here to help. Contact us today to learn more about our financing options and how we can help you secure a home loan that will work for you and your family.
Federally insured by NCUA. Membership and credit eligibility required. Equal Housing Lender.