Whether you’re upgrading, downsizing, relocating for work or hoping to get into your very first property, the decision to buy a new home is never one to be taken lightly.
When the timing is right, purchasing real estate can be a great move. Owning a home can add stability to your finances and more importantly, joy to your lifestyle. Getting into the home of your dreams can truly be a life changing event.
But taking the leap unprepared can have the opposite effect.
Which is why it’s important to be sure you’re ready.
Luckily, the test isn’t all that complicated.
1. Analyze the Financial Nuts & Bolts
No need to beat around the bush here. We all know that buying a new home is the biggest financial decision most people ever make.
Getting your ducks in a row money wise means:
- Eliminate Debt – Owning a home comes with responsibilities. Taxes, insurance, maintenance and repairs. It’s hard to keep up if your monthly budget includes big time payments on past debt.
- Healthy Credit Score – Good credit goes beyond getting a loan period. A higher credit score translates to better interest rates. When your credit rating is ready, so are you.
- Steady Income – Whether it’s a job or your own business, a stable work situation is ideal for home ownership.
And if you’ve just received a big pay raise, diverting higher earnings into a mortgage is a great way to prevent lifestyle creep while building for the future.
2. Feel Secure with an Emergency Fund
Being in excellent financial shape feels great – but sometimes life hits you with unforeseen expenses out of left field. Or even worse, you can unexpectedly lose your job.
Try to hit the following two savings milestones before you buy:
- Have sufficient savings for a reasonable down payment. 10% is a good rule of thumb but you’ll want to discuss options with your lender to see how your down payment can affect your monthly payments.
- Boost your emergency fund to cover at least six months’ worth of monthly bills.
3. Know What You Want
Sounds simple, right? Not necessarily.
Not everyone has a clear picture of their ideal home.
Everyone’s different and so the smart move is to download and complete our New Home Checklist before you start to browse new home communities.
- Here’s a Pro Tip – Bring along a blank copy of the checklist whenever you tour one of our model homes. This way you can compare the model & community directly to your needs.
4. Set a Realistic Budget
Understanding mortgage options and the mortgage process are keys to buying success.
5. Be Honest about Future Goals
Buying a new home is a long-term commitment. Wanting to settle down, build a life and be part of a community are most definitely part of the equation.
If you’re not sure that your future goals align with planting roots in one place for at least five years, it may be in your best interest to hold off.
Bonus Reading before You Close
You can never be too prepared when shopping for a new home. Here are more great tips from your friends at Taylor Morrison: