Buying a good home is the most common dream of Americans.However, it is a huge financial commitment, and one that can bring misfortunes if you jump into the bandwagon without taking any preparation.
Before completing the formalities to buy your dream home, here are the 13 tell-tale signs that help to determine if you're ready to be a homeowner.
Sign 1: You're on the right financial track
You know you're on the right financial track when you have already created a retirement savings account. You contribute a specific amount to your retirement account every month. Besides, you have already eradicated consumer debt.
Sign 2: Your job is safe and secured
Do you work in a frail company? If you do, then you can lose your job and income in any month. How will you make monthly payments then? If you don't have a plan B that will help you accumulate funds and carry on with your monthly payments, then you'll be in big trouble. If your job is safe and secured, then both your lender and the house will be safe and secured.
Sign 3: You're not thinking about relocating
Do you want to live in the house for a long time period? If you're planning to relocate soon, then there is no point in investing so much money on this house. Besides, you may not fetch a very good amount if you decide to sell your house suddenly.
Sign 4: You have money to make downpayment
You have enough cash to make downpayment on your dream home. You can manage your monthly expenses even after making downpayment on the house. You won't have to think about how to make mortgage payments every month.
Sign 5: You're prepared for the rainy days
Are you well prepared to tackle an emergency situation deftly? Have you saved enough money that will help you pay for your basic living expenses in the next 3-4 months? If yes, then you can complete the home buying process without any delay.
Sign 6: You can pay for your living expenditures
Your overall living expenses (along with your house) will be less than 25% of your budget after buying the house. You have already calculated the figures.
Sign 7: You have money to maintain the house
After you buy a house and start living in it, you'll have to bear several kind of expenses. This includes plumbing issues, renovation, maintenance, etc. Check if you're financially prepared to take care of these expenses.
Sign 8: You can stick to your personal budget
You're disciplined enough to follow a personal budget. You have allocated funds for various kinds of expenses and save money every month. In fact, whenever you make some extra money, you save 80% of it.
Sign 9: You want to accelerate your income
Given the ever increasing cost of living, you can't save a substantial amount if your income is good. Work overtime or ask your boss to give you a pay hike (only if you're a deserving candidate). Use every single opportunity to increase your income.
Sign 10: You're ready to go for cheaper alternatives
Expensive habits are not good for your financial house. Frequent dining outs and shopping trips exhaust your funds. Embrace new habits and find out how you can accumulate extra funds. You can use those funds to make downpayment on your house.
Sign 11: You have a really good credit score
A good credit score will help you buy a home quickly. Lender would be happy to give you a loan at low interest rate. You can end up saving thousands of dollars throughout the loan term.
Sign 12: You've created a special savings fund
Create a savings account online. You can also open an account in a credit union wherein you can potentially earn a decent interest rate.
Sign 13: You're ready to cut down unnecessary expenditures
You want to review your spending habits and find out the ones that are bad for your financial health. You are ready to give up bad spending habits since they would have a negative impact upon your savings rate.
You need to have a clear idea about the cost of the new home before making the purchase. Next, you should understand your lifestyle and finances very well. Finally, understand how you can save money every month to maintain your financial house properly.