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Are You Ready to Buy a Home?

So you’ve been saving up in pursuit of the ultimate American dream: buying your own home. Your timing couldn’t be more excellent: today’s real estate market offers a smorgasbord of competitive home offers for buyers to take their pick from. Many homeowners are not only enticing prospective buyers with state-of-the-art home upgrades – they’re even going so far as to offer significant financial assistance with down payments or closing costs! However, even with the incentives offered today, buying a home is still a major financial decision, and one that must be made with great care and research.

So how do you know if you’re ready to buy a home? Here’s a checklist of a few significant factors that will help you determine your ability to purchase a house:

Do You Have a Stable Job?

Have you had your job for a significant period of time? Are you a valued member of a robust company’s team? A steady and healthy income is one of the most important factors that mortgage lenders look at when deciding on a potential client’s ability to pay back a loan. If your company is downsizing, or you’re in the middle of a job hunt, wait until you have a more stable career before making the home ownership leap: you don’t want to have to worry about making your mortgage payments!

How is Your Credit?

Thanks to the subprime fallout, a healthy credit score is now more important than ever when it comes to purchasing a home. If you’re unsure as to your own credit rating, order a credit report up to a year before purchasing a home – that way, you can give yourself time to pay down any significant bad debt.

Are You Currently Living Within Your Means?

If you’re living paycheck to paycheck, it’s probably not the best time to purchase a house, no matter how enticing it may seem. Emergencies are bound to happen, and you’ll need to have a reserve of cash to keep you from falling into significant debt. Owning a home is one of the largest responsibilities you’ll ever have, and you need to demonstrate your financial ability before purchasing a house.

Consider Life Insurance

The importance of owning a life insurance policy is often overlooked by many potential homeowners, especially those with spouses. If you die without an insurance policy, your spouse will be forced to make mortgage payments with just one income. Make sure you’re covered in every kind of emergency before making an offer on your dream home.

There are many other factors that can influence your ability to own a home, but it’s important to remember that financial competency is one of the most important of all. If you have a history of late payments, foreclosure, or bankruptcy, chances are that you’re not ready for all of the responsibilities that comes with owning a home – and should wait until you’re truly ready to meet them all.