How do you know when it's the right time to buy a new home?

Are you ready to buy a house, or to buy a home?

How do you know if you are ready? How do you know if it is the right time?

These are the types of questions many people ask themselves when they are thinking about their future, where they are going and what they want out of life.

At AV HomeConsultants we believe that it is very wise to ask these questions before making your decision. After all, the decision to buy a home is most likely the biggest financial decision you will ever make!

To help you to determine whether you are ready to buy a house, we have put together a short list of things to consider, both financial considerations and personal considerations.

Do you have a steady source of income?

Most people need to borrow money from a mortgage lender or bank to be able to buy a house. Without a steady source of income, it is very unlikely that you would qualify for a loan.

Have you been employed on a regular basis for the last 2 or 3
years?

If you have been unable to maintain regular employment for a period of 2 to 3 years, it is unlikely that you could get the loan you need to buy a house. Also, it could indicate that even if you were able to get a loan, too many other factors could result in your being unable to meet the payments. If this happens, you could lose the house and all the money you put into it.

Is your current income reliable?

Again, this relates to getting a loan, and also to being able to meet the loan repayments. A reliable source of income for years to come is an essential ingredient in the decision of whether you are ready to buy a house now.

Do you have a good record of paying your bills on time?

From a lenders point of view, this is an essential question. From your point of you, it is imperative that you have the discipline to meet the loan payments when they are due. A history of late payments could indicate that you are not ready to buy a house.

Do you have a lot of outstanding long-term debt, such as car
payments?

Your overall debt situation will have a direct impact on your ability to get a loan. It could also impact your ability to meet the payments required under the loan.

Do you have enough money saved for a down payment?

It is possible to buy a house without putting up very much down payment, however we do not recommend that you do that. The reason is very simple… the bigger your down payment, the smaller the loan, the lower the monthly loan payments. There are also several other advantages in that it is easier to get a loan with much more favorable interest rates if you have already saved a good down payment. For example, it is relatively easy to obtain 100% - 103% financing if you have good credit, however the interest rates charged will be higher than if you were financing only 80%. Lenders like to see buyers invest some of their own money into buying a house, and therefore provide lower interest rates.

Do you have the ability to pay a mortgage every month, plus
additional costs?

This is a very hard question to answer, but we are trying to direct your thoughts toward “what if” thinking. What happens if you lose your job? Can you still meet the payments? Or maybe if you suffer an accident or illness? How difficult will it be to survive if you have a mortgage to pay? None of us like thinking about the possibility of these things happening, but before you decide to buy a house, you should at least consider them and try to see what effect they would have on your finances and your ability to pay the mortgage. In other words, what are the risks of borrowing money to buy a house?

If you can answer YES to all 7 of these questions, then you are certainly in the right financial position to buy a house. If the answer is NO or you are wanting more information on the financial aspects of buying a house, visit our finance pages for more information and some calculators that will help you know how much you can borrow.

Once you have decided that you are financially ready, you must then decide whether buying a house is the right thing for you to do.

This is a very personal area, and we are not able to help you with this. We recommend that you think very carefully about what you hope to achieve by buying a home, why you want to buy a home, and whether this is a long term purchase or an investment.

Kent sez: “If you are ready to buy a home, take the next step and ask a professional real estate agent to help you. It will save you time and money.”

For more information on whether it is best for you to rent or buy, click here.

We hope this information has been helpful to you. If you are ready to start looking to buy a home, why not check out “Petersens Picks” which is a selection of Kent’s more interesting properties currently for sale in the Antelope Valley. If you would like to know more about the Antelope Valley, click here. We'll be happy to answer any questions you might have - contact us. You may discover what we know - that the Antelope Valley is an excellent place to live!