5 Signs That You’re Ready to Buy a First Home
Buying your first home takes stamina, desire and commitment not only to navigate the complicated and time-consuming purchase process, but also to learn the ropes of being a responsible homeowner.
Maybe you’ve dreamed about buying. Or perhaps you’ve researched for-sale homes online, tried to calculate how much you can afford to spend, or peeked inside a few open houses.
But are you really ready, emotionally and financially, to step up your game and make your move? Here’s a look at what mortgage and real estate pros know about who’s good to go and who needs more time to prepare for homeownership—five ways to know if you’re ready to buy your first home.
PLAN TO STAY: Buying a home might seem like a no-brainer if your mortgage payment would be less than the rent you’re paying.
But that comparison doesn’t account for other costs of homeownership, including down payment, mortgage-related fees and home maintenance and repair expenses, says Ed Conarchy, a mortgage loan originator for Cherry Creek Mortgage Co. in Gurnee, Ill.
With those factors considered, short-term homeownership rarely makes sense.
“When you buy a home, you should know you’re going to stay for a minimum of five to seven years, and longer is better,” Conarchy says. “If you try to do everything you need to do to make that house yours and then you turn around and sell it after three years, you’re not going to break even.”
If your employment situation feels secure and you’re prepared to stay in one place for a while, you might be ready to buy.
GET PRE-APPROVED: Very few people have enough cash to buy their first home without a mortgage. Rather, most need financing to afford today’s home prices.
REALTORS® know that all too well, which is why many won’t spend much time with would-be buyers who haven’t had a serious talk with a mortgage professional.
As Jay Dacey, a mortgage broker in Minneapolis, explained, “A good REALTOR® will ask you what your criteria are and set up a search through the MLS for you, but a good REALTOR® is also going to say, ‘The next step is for you to contact a mortgage professional and make sure you’re pre-approved.’ ”
The loan approval process is no different for first-timers than it is for experienced home purchasers, Dacey added.
READY, SET, FLEXIBLE: Timing is another crucial element in homebuyer readiness, says Amy Butterworth, an associate broker in Boston.
A time frame that’s too long doesn’t make sense. But neither does a time frame that’s too short. For example, if your lease doesn’t expire for many months or you need to move within 30 days, buying a home might not be practical for you right now, Butterworth says.
The ideal situation is to be ready to buy and able to wait, especially if your housing market is a hotbed of multiple offers.
“There’s no place in the market for a buyer who’s hesitant,” Butterworth says. “But they can’t only be ready and raring to go because there will be disappointments — that’s just how the market is right now. You have to go into it with realistic expectations.”