When to Buy a House

buying_ahouse.jpeg.size.xxlarge.letterboxBuying a house requires proper timing since it is one of the financial moves that need significant investment. There are some things you may consider before deciding to buy a house. The budget is one of the biggest factors to be taken into account since owning a new place comes with a downpour of expenses. Therefore, you must also have good management skills with regard to your finances. You must be aware how much money you get every month and what your monthly expenses are. This will help you approximate whether you are financially capable of affording a new house or paying for the down payment. Estimating as well your future expenses such as mortgage payment, homeowners insurance, utility bills and property taxes will contribute to your decision.

Since buying a new home is accompanied by a mountain of expenses, you need to ensure that the source of your income is reliable. A stable cash flow is necessary to compensate for the monthly expenses. Other than this, you need to have an emergency fund in case something unexpected happens, such as instances of sudden illness, the loss of a job, and accidents. Having an emergency fund ensures that you can still continue to cover your mortgage payments until the source of your income is stable again.

Since monthly housing payments take around 33% of the monthly gross income, make sure that your outstanding debts do not consume more than 38% of your monthly payments. The debt-to-income ratio measures your pending student loans, auto loans, credit cards, and mortgage to the income you get every month. Knowing this will let you know whether you are prepared to invest in a new house. If you think you have a large amount of debt, it is advisable to postpone your home buying, since it will sum up to additional expenses such as rent, taxes, principal and interest rates, and insurance. It is better to pay first, or lessen your existing loans, to be more financially capable for your home purchase.

A lower monthly payment and lower interest rate for your mortgage can be possible if you have a good history on your credit report. It will be better to check your credit history, so you can correct it if there are any errors. This can also help in knowing if it is possible to improve your credit score.

Having your own house entails many responsibilities and expenses, so you have to make sure that you are prepared for all these things before buying a house.