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Is Now the Right Time to Buy a House? Important Things to Consider

By Ryan McPartland of Mortgage Acuity


When it comes to purchasing a home, there are numerous factors to consider. From having the necessary down payment to assessing your affordability, committing to a house is a significant decision. The essential question boils down to this: Should I buy a house? In this blog post, we will delve into the factors you need to take into account and explore the signs that indicate you are ready to buy a house, as well as signs that suggest you should wait. Additionally, we will address common questions about the home buying process.

5 Signs That You Should Buy A House:


1. You Don’t Carry Excessive Debt:

Lenders pay close attention to your debt-to-income ratio (DTI), which compares your minimum monthly debt payments to your monthly gross income. To determine how much mortgage you can afford, it is crucial to keep your DTI manageable, ideally at or below 43%. While being debt-free is not a requirement, it is essential to ensure that your existing debt is manageable alongside your new mortgage payment.


2. You've Saved Money For A Down Payment:

Saving for a down payment is another vital factor that determines your purchasing power. While some loans, like VA loans, don't require a down payment, most mortgage options do. Different loan programs have varying requirements. For example, FHA loans typically require a median FICO® Score of at least 580 with a 3.5% down payment. Conventional loans may require a minimum down payment of 3% for first-time home buyers or no more than 5% for a one-unit primary property.


3. You've Budgeted For Additional Costs Associated With Homeownership:

Aside from the principal and interest payment, homeownership comes with various costs and fees. These include closing costs, property taxes, mortgage insurance, homeowners insurance, homeowners association (HOA) fees, utilities, and home maintenance. Being aware of these costs and factoring them into your budget is crucial for successful homeownership.


4. Your Credit Scores Are Strong:

A qualifying credit score is necessary to secure a mortgage. Different loan programs have different requirements. For example, FHA loans generally require a median score of at least 580, while conventional loans typically require a minimum qualifying credit score of 620. A higher credit score can lead to more favorable mortgage rates.


5. Your Income Is Stable:

Committing to a home mortgage is a long-term financial commitment. Lenders will assess the stability of your income to ensure you can sustain your mortgage payments. It is advisable to avoid significant career changes while applying for a mortgage.


5 Signs That You Should Wait To Buy A House:


1. You Have Too Much Debt:

If your existing debt prevents you from comfortably affording a home or qualifying for the desired mortgage, it may be wise to focus on paying down your debt first. Establishing a payback plan and reevaluating your situation in a year or two can help you reach your homeownership goals.


2. You Don't Have An Emergency Fund:

A steady and sufficient emergency fund is crucial before taking on a mortgage. This fund serves as a safety net in case of income loss or unexpected financial strain. Building an emergency fund that covers 3-6 months' worth of necessary living expenses is recommended.


3. You Have A Low Credit Score:

A low credit score can make it challenging to qualify for a mortgage or obtain favorable rates. If your credit score is too low, you may need to focus on improving it before considering homeownership.


4. You Plan To Move Within The Next 5 Years:

If you anticipate relocating within the next five years, renting may be a more suitable option. Selling a home involves costs, such as real estate agent commissions, which you can avoid by renting instead.


5. Your Income is Unstable:

If you don’t have a steady job, it’s probably not the right time to be locking yourself into a big monthly payment. You really should find a job that you enjoy and that you know can provide you with a steady flow of income before you commit to buying.


Take the time to assess your situation and use this as a basic guide to determine if now is the right time to take the plunge to buy a home. Feel free to reach out to me at ryan@mortgageacuity.com with any questions. I can help you with this decision and can provide you with additional information.

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