This is a question every first time home buyer must ask. Unfortunately, most first time home buyers (or anyone else, for that matter) do not really know what it means to be “ready” to purchase a home. But when I get this question, I generally go over a few key points.

Where are you living now?

If you have never lived on your own, it can be a difficult transition to go from living with family or friends who help you on a daily basis, to living completely independently. It is often helpful to be on your own for at least a few months before buying a home, just to be sure you are ready and able. If things go poorly in an apartment, you can change them, but if they go poorly in a house, you can be in some real trouble.

What is your current rent?

If you are paying $500 a month in rent and want to buy a house with a $2000 monthly mortgage payment, you need to be really sure you are ready for that. Like above, it might be worth trying it for a few months by paying yourself the full mortgage payment each month. You can do this by putting the extra mortgage cost into savings. If you are comfortable with this after a few months, then you might be ready to make the jump.

What is your credit like?

While there is a lot of flexibility in the mortgage industry around credit, it is still an important factor which will determine the type of loan you can get and the amount you can borrow. Understanding your credit is extremely important before you start looking at houses.

Do you have a down payment and reserves?

A down payment can be as little as 3.5%, but you also need to be sure you have some emergency reserves in place, just in case something comes up in your life. Purchasing a house is one of the biggest financial decisions you are going to make, and you do not want to jeopardize it because you are not prepared.

Do you have stable income?

If you have been jumping from job to job or are in a shaky industry, it might be a good idea to stabilize your income before making the decision to purchase. If, on the other hand, you have been in a stable field for years and have steady income, then a home purchase might be a great idea for you.

These are just a few of the key things to consider prior to purchasing a home. If you have any questions about any of these considerations, or if you would like more information about how much you qualify for, please contact me. And if you have anything to add about the factors to consider when making the decision to buy a house, please leave a comment.