Becoming a homeowner is the dream for millions of people. But it’s safe to say that some people are ready to do that, while others are far from it. You might be eager to head to the bank and apply for a mortgage loan, but consider these 4 reasons before you do that. Buying a house is quite possibly the most expensive purchase you could make. So it’s better to know you’re not ready to take on such a financial responsibility than to live to retreat it.
You Lack the Financial Requirements
To buy a house, you will most likely need to take out a mortgage loan. This year, more than $2,3 billion in mortgages were taken out by US residents. That means quite a lot of people bought houses. And while not everyone needs a mortgage to buy a house, most people do. Taking on such a financial responsibility isn’t easy. Considering that most mortgages are paid out across 30 years, it can put you under heavy financial strain.
So the first thing to look at is whether or not you can apply for one. The bank doesn’t give our loans to every person that enters their establishment. You might be very eager to buy your first house, but the bank will evaluate your financial power before giving you the mortgage. Thus, applicants will have to prove to the bank that they can take on such financial responsibility. There are certain requirements applicants have to meet to do that.
If you lack the financial power to meet these requirements, then not only will you get rejected, but that’s the first reason why you aren’t ready to buy a house.
You Lack the Money To Put A Down Payment
You have it all figured out. Many US residents look towards the real estate market as a brilliant way to invest or even start businesses. A popular method is buying a house and renting it through traditional means or Airbnb. While we won’t discuss the pros and cons of Airbnb and traditional renting, what we will say is that it’s a popular investment for millions of Americans.
But if this is your first time buying a house, an apartment, or a flat, then do know it isn’t as easy as they make it. There is obviously the issue of securing a mortgage loan first. But even so, you will need to put in a down payment. Most Americans remember that a down payment is 20% of the total amount of the property. In recent times, that number has changed. Some down payments are as low as 7%. But still, you will need to put a down payment if you want to buy a house or an apartment.
If you lack the money to do that, then that’s a sign you’re not ready to buy a house. Most money and real estate experts suggest putting up as much higher down payment as you possibly can. You do this because you’ll pay much less in mortgages over time. But if you lack the meet even the basic down payment requirements, then it’s best to focus on your finances first.
You Lack Emergency Savings
Homeownership isn’t easy. It’s also quite expensive. Even if you’re financially capable of buying the house, are you even aware of the tons of hidden costs that come with it? Stuff like property taxes, insurances, maintenance costs, repairs, renovations, etc, these are all seriously expensive.
A common error is for first-time homeowners to completely disregard these expenses as valid. But once they realize just how much expensive they can be, then it leaves them in a very serious situation. This is where emergency savings come into play. A healthy savings account can solve all of these problems without putting yourself under additional financial strain.
Since you’ve been putting money into your savings account for quite some time, you don’t really think about it until the moment comes. But if you lack emergency funds, then you’re better off delaying buying a house for some time until you have enough money to pay all the hidden and additional costs that come with homeownership.
You’re Not Sure What the Future Holds
Most first-time homeowners buy houses to start their independent lives. They have jobs, a significant other, and are ready to start a family and move into their own place. While it’s always smart to invest in real estate, the decision becomes quite risky if you have no idea what the future holds. Maybe you’re thinking of moving to another state, country, and even perhaps move overseas.
Is buying a house really that important for you at the moment? If you’re not sure what the future holds, then that’s another reason you’re not ready to buy a house.