Should I Buy A Property? 6 Signs You Might Be Ready

by Guest Author on September 18, 2014

If you’re on the fence about buying a property there are certainly many things to consider. It can be assumed that you have already done some research. However, there may be some considerations that you have not yet come across. Here are six signs that might help you determine if you are ready to buy a property and what you might want to consider looking for in that property.

1. Budget

Buying property is the biggest investment of your life; chances are. So, for that reason, you need to have strong budgeting skills (or someone that can help you) before buying a property. If you are able to successfully plan your expenses for months in advance then you stand a good chance at being able to properly budget all of the expenses that are associated with property ownership.

Creating a mock budget by figuring out how much a house (or property) in your area might only be the tip of the iceberg. Be realistic about all the expenses associated with it: talking to an experienced real estate agent might help to determine the actual monthly costs and they can help you determine what is right for you based on your budget. For example: it’s important to factor in items above and beyond just a mortgage cost with interest; also consider water, hydro, property tax, maintenance fees, transportation fees to and from work etc. Looking at the big picture is extremely important so that you don’t feel trapped once you do decide to buy a property.

2. Stay ahead by 3-6 months

Your grandmother may have kept a jar full of money and called it her “rainy day” fund: unfortunately, that likely won’t cut it these days. Although, it’s a great way to look at your finances and be prepared in case there are any unexpected expenses that come up. Perhaps you need to replace the roof on your house, toilets may need repair or replacement, an unexpected leak, an unexpected medical expense, or even just some renovations you’d like to take on to make your house more of a home.

A good rule of thumb is to keep approximately 3-6 months of “expenses” tucked away with easy access in case something comes up. If you know your budget, this shouldn’t be hard to figure out. The hard part might just be putting the money aside to ensure it’s available.

3. Feel at Home

Financial advice aside, when you are looking at different properties, pay special attention to how you feel about each property you look at before you decide to buy. It typically only takes a few seconds to form an initial opinion; so take that into consideration but also think through the entire property before making a decision.

A great way to ensure you end up buying what you are looking for is by being prepared. Talk to your real estate agent about your top-ten list or house buying checklist. Although a first impression might not be perfect, the fact of the matter is, the property that you are looking to buy might just be exactly what you are looking for.

4. Keep your costs at 33%

You don’t need to have a perfect credit score, and you don’t have to be debt free to own a property. However, you should have strong control over these areas in your life. Loan officers are going to study your debt to income ratio and compare that to your credit reports. Your total debt payments should not exceed 38 percent of your income. Additionally, housing costs, including mortgage, interest, utilities, and taxes should not exceed 33 percent of your income: to ensure you have enough money for day-to-day and month-to-month expenses. If you have a lot of debt, you may want to reconsider purchasing property for now until your finances are in order and you can sustain a comfortable lifestyle.

5. Choose carefully

Finding the perfect house is one thing, but it shouldn’t be the only thing you consider. It’s important to choose the property you decide to buy carefully so that it fits your wants, needs and lifestyle.

If you are buying your first property, try not to get caught up in the biggest house for the smallest amount of money. There are a number of factors you should consider including what you might be looking for in the community, how long you plan on staying at the property you buy and what your long term goals might be. Talk to your real estate agent about your whole scenario: let them know what’s important to you and what your plans are. As a first time home buyer, it’s important to ask the right questions and find out what you need to know as a home buyer.

6. 20% down

You should have at least 20 percent of the total value of the property available as a down payment. This will allow you quickly gain some equity in your home and ensure you can buy the property you want without any reservations. It can also help you avoid higher interest rate loans and other payments required up-front when closing the purchase of your property.

Information Credit to Sundaybell where you can meet and interview real estate agents and USDA Loans Direct.

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