If you have been renting for a while you might be wondering if you're ready to be a homeowner. David Sant from Cyprus Credit Union stopped by, and said it's a big step, so you'll need to ask yourself a few questions to determine if you're ready or not. If you're wondering where to start, he said try asking yourself these questions:
Can I Save for a Down Payment?
While there are a few low or no down payment mortgage options, most traditional loans require at least a 20% down payment. If you have limited funds at the moment, your emergency savings, paying of major debt and retirement savings should be your priority.
If you find yourself in a position where you are able to save for a down payment, it might be beneficial to put the money in a separate account so you aren't tempted to touch that money.
Can I Afford a Mortgage Payment?
Ideally, your mortgage payment shouldn't be more than 30 percent of your monthly income. Spend a few months taking the amount of your potential house payment and put it into a savings account.
This money shouldn't be used for anything else, treat it like a mortgage payment. Once it goes into the savings account it's gone, just like it would be if you were paying your mortgage. If you're struggling with the amount, it`s a good sign you'll need to find a less expensive home. By the end of this exercise you should have decent down payment for the house you're looking at.
How Much Debt Do I Have?
Take a look at what debts you have. The last thing you want to do is put yourself in more unnecessary debt by jumping into a mortgage. Come up with a plan to get rid of your debt as soon as possible so you can comfortable buy your home.
Am I Ready For the Commitment?
A home is a big commitment, much more so than an apartment or rental home. With rentals and apartments you can simply walk away when the lease ends. With a home it isn't as easy. You have to do a lot more to move away.
If you see yourself moving away for a new job or expanding your family, you might want to wait until things are more settled before buying a home.
Find out more by visiting cypruscu.com.