4 Signs You’re Ready to Buy a Home

Being a homeowner is a big responsibility, so knowing when you’re ready can be difficult. Here are three clear signs that you’re ready to buy a home.

You Have a Budget and a Down Payment

The first step toward owning a home is figuring out how much you can afford to spend on one. Since your debt payments should not total more than 43 percent of your income, you’ll need to run a few calculations. Add up your current monthly debt payments, then multiply your current income by 0.43. Subtract the first number from the second to find out what you can afford to spend on housing. As you set a price range, remember to leave some extra room for homeowners insurance, property taxes, homeowners’ association (HOA) fees, and other related expenses.

In addition to the standard monthly expenses, you can expect an up-front expense in the form of a down payment. If you qualify for an Federal Housing Association (FHA) loan, you may be able to put as little as 3.5 percent down. Otherwise, a typical down payment often ranges between 10 and 20 percent. A higher down payment will save you money on monthly payments, but you shouldn’t wipe out your savings account to make the payment.

Your Have a Realistic Wish List

Before you start looking at new homes in Dallas, you should have some idea of what features you want. Maybe your ideal home has a deluxe master bathroom with a Jacuzzi tub, a spacious kitchen with granite countertops, a yard the size of a baseball field, and hardwood floors in every room. Perhaps location is more important to you, and you’d prefer a studio apartment downtown.

Whatever you’re looking for, take a moment to make sure your wish list matches your budget. Do a little market research to see what you can realistically afford and understand what you can’t. Find a home that meets all your wish list requirements, then check the price. If it’s way out of your price range, find a home that you could afford, noting its features. You’ll probably have to cross a few things off your wish list and prioritize others before you begin searching in earnest.

You Plan to Stay in the Area

When you sign a 30-year mortgage, you aren’t necessarily committing to spending the next three decades in one place. However, buying a home probably isn’t the best option if you don’t plan to be in the area for long. If you aren’t reasonably confident that you’ll stay in the same city for the next 5–10 years, you may want to rent rather than own. If renting isn’t an option, then look for a home that is well below the upper limits of your budget. That way, you won’t take as much of a financial hit if you have difficulty selling the home when you move.

Because buying a house is such a big commitment, it’s important not to jump into home ownership prematurely. To avoid making a costly mistake, take the time to honestly gauge your finances, expectations, and stability using these guidelines.