Think you’re ready to buy a house? Here’s 4 signs.

home purchase

“Am I ready to buy a house, or should I just keep renting?”

It’s one of the questions that we hear most often and something to which first-time homebuyers often spend months, if not years, trying to figure out the answer.

Below are a list of four tell-tale signs that you’re ready to bite the bullet and take the leap into home ownership:

 

Sign #1: You’re ready to settle down

The first sign that you’re in the right mindset to become a homeowner is that you’re ready to stay put — at least for a little while.

 

home rent

Conventional wisdom states that in order for your purchase to make financial sense, you’ll want to plan on staying put for at least the next five years. When you sit down to think about house hunting, you’ll want to use that timeframe as your reference point.

Ask yourself the following questions:

  • Can you see yourself staying at your job for that long, or will you be looking for new opportunities?
  • If the right position came along, would you be willing to move for it?
  • Do you like the area you’re living in, or would you like to explore other options?
  • Do you see your living situation changing soon?
  • Are you planning on moving in with a significant other or expanding your family?

If these questions make you squirmy, the idea of looking five years into the future still feels a little too far ahead for you to grasp, or you still want to see where life life takes you, you may want to consider renting for a bit longer or thinking about a for-a-few-years home vs. a forever home.

2. You’re done living paycheck-to-paycheck

home lease

Let’s face it, becoming a homeowner is expensive.

Not only is there a monthly mortgage mortgage payment to consider, which will likely be more than your current rent check, but prospective homebuyers need to be prepared to come up with a sizable down payment, shoulder a portion of the closing costs, and have the dough to take care of any necessary repairs.

Luckily, there is a way that you can prepare for the added financial pressure before the big day comes and understand how much house you can afford. Use a mortgage calculator to estimate what a monthly payment could based on the type of home you’re looking to buy. Then, subtract the amount you pay in rent each month, and aim to put the the remainder into savings.

Start by working towards a down payment that could be worth 3%-10% of a home’s sale price, and then move onto a seperate emergency fund.

3. You’re ready for more responsibility

home renter

Once you find a home and actually buy it, that’s really where all the fun begins.

Yes, owning a home means that you have a lot more freedom to improve the property as you see fit — whether that means putting in an entirely new kitchen or redoing the hardwood floors.

However, in addition to that creative freedom comes an added layer of responsibility. As the homeowner, you’re the one who is responsible for any necessary maintenance and upkeep on the property.

Think about what you’re like as a tenant now.

Are you willing to roll up your sleeves and help with small tasks or are you relieved to know that you have someone to call? If you’re less handy, you may want to take some time to familiarize yourself with common home maintenance tasks before committing to buying anything. It always helps to have a fair idea of what you’re getting into.

4. You know what you’re looking for

vacation house

Last but not least, though it may sound self-explanatory, when you’re trying to determine whether or not you’re ready to buy a home, it’s useful to have an idea of what you’re looking for.

You don’t have to have every single detail set in stone. (In fact, it’s preferable if you leave some room to flexibility in your home search.) That said, though, having a basic set of parameters in mind will make the homebuying process go much easier.

Here, you’ll want to think about the most important factors that you absolutely must have in a home. These will be the things that you would not feel comfortable buying a home without. This may include details like your preferred location, an ideal number of bedrooms and bathrooms, a target sale price, or any specific must-have features like that perfect picture window view.

If you have a strong idea of your must-haves and can’t see that changing in the near future, and the above signs sound like you, you may just be ready to take the plunge into home ownership. If not, there’s no shame in the game waiting.

 

This article originally appeared on OpenListings.

How to Get Approved For Your First Mortgage

After the recession, practically all mortgage lenders tightened their fists, making it more difficult to get home loans. However, young home buyers and first time home buyers can still fulfill their dreams of buying a house by getting approved for a mortgage.

The real estate market has become even more competitive and buying a property requires more aggressiveness on the part of the buyer. The increasing competition in the market simply means that intending home buyers need to be qualified for a mortgage before shopping for a property.

Some of the factors to be considered before applying for a mortgage include your monthly income, your credit score, the total monthly debt payments, and the amount you can afford for the home.

Below are 6 tips to ensure you get approved for your first mortgage.

1. Understand and calculate your debt obligations and your income

The first step to getting approved for a mortgage is understanding your debt obligations and monthly income. The relationship between your gross monthly income and the payments you make every month is called the “debt-to-income ratio.” Texas mortgage lenders and other lenders across the nation require that you provide at least two weeks of pay stubs or a 30-day paycheck stub. Therefore, it only makes sense to start collecting these documents even before applying.

For self-employed persons and those with variable income, the underwriting process is usually more involved and in some cases, they are required to submit copies of past 2 years’ tax returns.

To get approved for a mortgage, borrowers are meant to stay within some ratios used by lenders to determine the amount the borrower can afford to repay.

2. Check and manage your credit

 

Before you go ahead to apply for a mortgage even if you intend getting FHA loans, it is advised that you obtain your credit history report and credit score. This helps you to verify the veracity of the report and identify possible errors if any.

It might be worth subscribing to a service that provides credit report monitoring regularly in the months building up to your mortgage application. For mortgage loans other than FHA loans, the estimated FICO credit score is required to be at least 680.

3. Determine your budget

 

Before you go to a mortgage lender, it is best to look at your budget and determine the cost of the home you can afford considering your income and expenses. The common rule is that the total house payment should not be more than 35 percent of gross income.

4. Determine what you need and save for a down payment

 

The next step towards getting your first mortgage application approved is to determine how much you can save towards your down payment. On the average, mortgage lenders require a minimum of 5 percent down payment. However, this might not be applicable to persons getting FHA loans or any other such loan program.

For intending homebuyers that can afford it, it is advised that a 20-percent down payment is made to avoid the costly private mortgage insurance otherwise known as PMI. PMI is meant to protect the mortgage lender in case the buyer decides to foreclose before building enough equity in the property.

5. Commit to the maximum amount you intend spending

 

Before you begin the mortgage approval process, it is advised that you determine the maximum amount you intend to spend on the property and subsequently commit to it. Your desires, friends, and colleagues may sometimes try to tempt you into buying a home that is beyond what you can afford. However, it is advised that you only go for a home that is within your budget regardless of the economic climate to avoid a foreclosure.

6. Where and when to apply

 

Meeting a mortgage lender and getting pre-qualified is highly recommended, and this can be done at any time. A pre-qualification is informal and it is not binding on any party. However, it shows that your lender thinks that mortgage application will be approved based on your income, credit score and other factors.

Pre-approval comes into the picture as you get close to buying the house. A mortgage broker, local bank, or credit union can get you a pre-approval. National online mortgage lenders can also get you pre-approved online.

Conclusion

 

All in all, prime borrower candidates (good income and credit); tend to get the best rates from reputable mortgage lenders. For persons that do not fall into this category, shopping around for the most suitable mortgage loan will be the best option. If you are ready to buy a home in Texas, we recommend this Houston mortgage lender.