Is the Timing Right?
When you think about homeownership, do you wonder if now is the time to buy your first Hill Country home? Homeownership is a big decision that requires careful thought from anyone- especially a first-time buyer. Here are a few indicators that can help you decide if the timing is right for you.
You are budgeting your income and expenses
Homeownership requires multiple different fixed monthly payments, including mortgage, taxes, insurance, and homeowner dues. Additionally, it will require maintenance costs that can vary from month to month. A solid budget will ensure that all these costs are being accounted and planned for.
You have a down payment
Traditionally, lenders ask for a 20% down payment on a loan. While the percentage you will need to put down varies from one lender to another, it is wise to have at least 5-10% of the price of the homes in your price range. Additionally, you will want to have another $5k-$10k saved to cover your closing costs.
You have a reliable source of income
When buying a home, it is important that you have a sustainable, predictable monthly income. In fact, most lenders will require that you show proof that you have been receiving reliable income for a period of 2 years or more!
You have money in a savings fund (that you won’t be using for a down payment!)
Storing up extra money for a “rainy day” is important when you are a homeowner. At any moment, a maintenance or repair issue may force you to turn to your savings account as a backup plan. Additionally, in the event of a job loss or illness, you will want to be sure that you have enough money stored away to sustain your mortgage.
You have your debts under control
Applying for a loan is about more than saving extra for a down payment you can make. You’ll also have to consider any outstanding debt you may have. This total debt amount will be compared to your total income, determining how much you can spend on your home. Lenders recommend that first-time buyers try to be as debt free as possible.
Your credit is in good shape
Credit is a huge factor when trying to obtain a loan. Your credit is directly tied to how much you will qualify for and what kind of mortgage rate you will get. Generally, the lower your credit score, the higher your interest rate...a number which will then raise your monthly mortgage payment. If your credit score is too low, you may be given advice to raise it and then asked to apply for the loan at a later date.
If you have looked at these items and realized that you fit all of these criteria, the time to buy your first Hill Country home could be very near!
mortgage:A contract that represents the debt owed by the borrower to the lender for the money borrowed to purchase a property.
closing:The final, legal act of a transaction, where contracts are agreed upon and finalized, and monies are exchanged.