Wondering whether or not it’s time to buy? Here are five signs that you are ready to start your home search.
Remember the process of obtaining your current rental? You probably had to compete with a variety of other potential tenants and agree to a host of restrictions on how you could use and enjoy the property. You also likely had to pay thousands of dollars in deposits, with no guarantee that you would get any of that money back at the end of the lease. If your lease is up soon, you may already be worrying about how much your landlord will raise your rent this time around, or if you’ll need to start looking for another rental.
However, with mortgage rates currently hovering at historic lows, you may even be considering making a major change and buying instead of renting. While you may find the home purchase process a little daunting, with a few smart moves—and the right lending partner,* obviously*— it can be totally manageable and rewarding. Here are five signs you may be ready to buy your first home and begin investing in yourself and your future:
1. You’re tired of paying your landlord’s mortgage.
When you pay the rent each month, you’re building equity— for your landlord. UGH. As the owner of an investment property, your landlord typically charges rent sufficient to pay a mortgage payment, tax bill, homeowner’s insurance, and any repairs and improvements. If you’re already paying for all of that, why not do it for yourself?
Owning your home means that every month that you pay your mortgage, you are investing in yourself and your future. Each payment means you’re edging 30 days closer to a truly liberating time when you’ll own your home free and clear. In addition, you’ll have the opportunity to build equity as the market goes up, driven by consumer demand and increased market value. That means that, in the long term, you benefit from those payments instead of your landlord.
2. You’re ready to put down roots.
Maybe you’ve spent some time moving around, traveling for fun and trying new things. Maybe you’ve been building your career and had to move for various jobs. Maybe, after bouncing around several towns and states, you’ve finally found a location that really appeals to you. Regardless of where you’ve been, if your lifestyle is now steady and stable and you’re hoping to establish a more consistent way of life in your current city, it may be time to buy a home.
Renting makes sense when you are still in exploration mode and are more focused on parties than patio furniture. But one day, you might find yourself feeling ready to settle down—it happens to the best of us!—and to enjoy the financial security that owning one’s own home affords. This provides you a literal home base and a sense of permanence, whatever your age and whether you are married or single.
3. You’re ready to have a living space where you make the rules.
What would you do if you were truly in charge of your space? Paint the walls lavender? Update the kitchen? Install a hot tub? Put up a privacy fence or hone your horticultural skills in the garden? When you’re living in a rental property, you are bound by pages of limiting dos and don’ts, so your home isn’t really under your control. In addition, every spot on the carpet or scratch in the paint represents the potential loss of your security deposit.
When you own your home, you can make the changes and improvements you want (unless you’re bound by a homeowner’s association, of course!). You’re generally free to adopt a furry friend or install environmentally friendly additions such as solar panels. You’re at liberty to create an outdoor space custom-designed to your family’s lifestyle. Best of all, you can make changes to your home that add value and pay dividends in the form of increased equity and market value. That translates into an increased return on investment when you put your time and energy into improving your home.
4. You’ve put your financial house in order.
For most buyers, getting financially ready for homeownership is one of the most intimidating aspects of the process. Whether you’re accruing your funds through a gift from a family member, savings from a side gig, or years of frugal living, it’s important to ensure that you have your finances in order early in the process.
How do you know you’re financially ready to buy?
- You have optimized your credit rating in order to qualify for the best possible mortgage rates.
- You’ve saved up for the earnest money deposit (EMD), down payment, and closing costs, as well as an emergency fund for repairs.
- You have a reliable and steady source of income that is well documented in preparation for the mortgage underwriting process.
Start talking to your real estate professional and mortgage lender early in the process so that you can have a solid idea of how much money you’ll need to buy the house you want. You might want to start by asking your lender for a pre-approval letter so that you can determine how much home you can afford—and learn more about qualifying for a mortgage here.
5. Homeownership is a goal for you.
According to a report by the National Association of Realtors, the majority of recent home buyers (38 percent) are millennials. And, per a survey by Freddie Mac, the next generation of home buyers—Gen Z—describe homeownership as a major life goal, with 86 percent holding strongly positive views of homeownership.
Homeownership is about more than a roof and four walls. The home you choose can serve as the backdrop for some of your most precious memories with family and friends. It’s the place that represents security and comfort on the most basic level. While you may have a variety of life goals, for most people, homeownership is a culminating accomplishment that underscores those other goals. If homeownership is a major goal for you, it will be worth it to you to undertake the work to make it happen.
Reading the above and nodding along vehemently? We got you! Simplist has more than 50,000 options from some of the industry’s leading lenders, and friendly loan experts who are ready to answer all your questions—we’re here to ensure you get the guidance you need as well as the right loan for your home purchase. Talk to your Simplist loan expert and begin your homeownership journey here.