Finding Out If You’re Ready for Home Ownership

Mortgage in Salt Lake CityYou’re due for a move, but one important decision remains. Should you keep renting, or is it finally time to buy your own house? This isn’t an easy question to answer, since it depends on many different factors.

If you’re considering home ownership, then ask yourself these questions.

Is it Even a Good Idea?

First, it’s important to determine whether home ownership even makes sense for your situation. The biggest factor is how long you plan to stay. If your employment in that area is secure and you think you’ll live there for at least four years, then buying a home is worth it.

You also need to think about the area’s property values and rental market. In some places, homes are extremely expensive, while rent is a steal. You could save thousands of dollars, or avoid losing a lot of money in property depreciation because of an unstable market.

How Prepared are You?

Now you need to consider how good of a shape you’re in, both financially and emotionally. Are you struggling with credit card debt, student loans, or any other financial obligations? Is the timing right, and can you afford to spend a few weeks on this?

Having a sizable nest egg for your down payment is also highly recommended. A 0% down mortgage can be far too expensive for most people. If everything checks out, then it’s time to see what kind of house you can buy.

What Can You Afford?

Thankfully, mortgages in Sandy have low interest rates today. But can you qualify for one? And more importantly, just how large of a loan can you afford? A monthly payment that’s too big can quickly drag you into debt.

The Federal Housing Authority recommends never going above a 43% debt to income ratio. You want your monthly payments to be around 30% to 35% of what you earn to be safe. Make sure to get pre-approved before house hunting, since it will help speed things up.

Not happy with the kind of houses you can afford right now? If so, there’s nothing wrong with renting for another year or two as you try to build up your finances. Remember, a home is probably the biggest purchase of your life, so don’t rush it.