Just because the bank approves you for a loan does not necessarily mean you are ready for your first home. Plenty of first-time home buyers end up regretting their decision and realizing they might have been better off waiting a little longer before buying. To ensure you do not end up in this situation, ask yourself these five questions to make absolutely sure you're ready to commit to the responsibilities associated with becoming a homeowner.
How stable is your job?
If you're in a thriving industry, it might be true that if you lose your job, you can come by another one before you become unable to afford your mortgage -- but will that new job be within driving distance of your home? You would not want to purchase a new home near your current job, only to lose that job and gain a 90-minute commute a year later. Make sure your job is reasonably stable before you seriously consider buying a home.
Do you have extra time for tasks like yard work and maintenance?
You'll be surprised how much more time is associated with living in a house versus a rented apartment! You'll need to make time to mow the lawn, tend to the gardens, sweep the patio, clean the gutters,and complete a host of other similar tasks. If you're already struggling to fit all of your obligations into your day, then you might be better off renting for a little longer until your lifestyle settles down a bit.
Have you found a good buyer's agent to work with?
If you do not have a real estate agent, or if you are not entirely comfortable with the agent who you're currently working with, you are not yet in the right position to buy a home. Do not be afraid to cut ties with an agent who does not listen to your needs and take the time to work with you. Talk to several different agents at various agencies to find one who is familiar with the area where you want to live, and whose personality jives with your own. Often, your best bet is to work with an agent who only works with buyers -- not both buyers and sellers. That way, you can be assured that this person has your best interests at heart.
Contact a professional service, such as The Gresham Group, and inquire about they buyer's agents.
Do you have enough saved for your down payment to avoid private mortgage insurance?
If you do not have enough money saved to make a 20% down payment on the home you're considering buying, then you will have to pay for private mortgage insurance, or PMI. This insurance protects the lender in the case that you default on your loan. Payments are based on the size of your loan, and they can be substantial. If you do not have the 20% down payment saved, consider saving for a little longer before you purchase a home -- your total monthly payments will be lower if you do!
Have you thoroughly researched what you want in a home?
It's easy to get so wrapped up in the excitement of finally being able to buy a home that you purchase one of the first ones you see without fully considering whether it is right for you. If you do not have a detailed list of the features you need and want in a home, then you're not yet ready to buy. Sit down and make this list, so that when you do start seriously house hunting, you are not tempted to buy a home that ends up not meeting your needs just because it was pretty and caught your eye.
Buying your first home should be a special experience. By asking yourself the questions above before committing to buying a home, you'll ensure your house continues to feel special, rather than like a big mistake.