How to Know If You’re Ready to Take on a Home Loan

There are several signs that you may be ready to think about buying a home of your own. If you meet the criteria, then you are probably ready. If not, then work towards meeting the goals. Here are some points you will want to consider.

Have a Steady Job

While no one is certain that their job will still be there tomorrow, having a steady job is important before you consider buying a home. A history of job jumping often hurts your credit as it can make you look like more of a risk. The average professional worker stays 5.5 years at their job while the average 21 to 34-year-old stays just 3.4 years. The average person fixing to retire, however, has put over a decade with a single employer. While it may become impossible to stay with your current employer, make sure you are moving up the career ladder when you leave if possible.

Established Emergency Fund

When you own a house, you have to pay for parts when something breaks. You may also have to pay for someone to do the work if you do not have the skills yourself. You should save a minimum of three months of your current expenses before you buy a house. If you work in a field where it will be more difficult to replace your current income if you lose your job, then aim to have a nine-month emergency fund set aside.

Build Your Down Payment Fund

The more money that you can put down on a home, the lower your payments will be each month. Aim for putting 20 percent down on a home as most lenders will not make you pay for prime mortgage insurance at that point. Not having to pay this insurance can save you several hundred dollars each month. If you do not have 20 percent saved up, then you will have to pay this amount each month on top of your mortgage. This money should be separate from your emergency fund.

Plan on Staying Put

There are many different reasons that a person may consider moving. If you think your job will require you to move soon or you are not happy living in the city where you are currently living, then you may want to hold off on buying property. You need to plan on living in it for at least the next five years. Talk to experts, like those at New Horizons Credit Union, to see what they think home prices in your market are going to do over the next few years.

There are many great times to buy a home. Use these ideas to see if you are ready to buy a home.

About the Author

Hannah Whittenly is a freelance writer, ocean explorer, and a mom. You can follow her on Twitter and Facebook.

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