Without a doubt, mortgages are the largest debts most consumers take on in their lives.
Sure, throwing a three-piece sectional on your credit card is a sizeable undertaking, but with proper planning, you can pay off the balance in a few months. As a homeowner, however, the balance is paid down over decades in most cases, and the decision encompasses more than whether new seating will match your living room's design.
To figure out if you're ready for the responsibilities that come with owning a home and managing home loans, ask yourself these seven questions:
- Am I ready to stay put? Unlike renting, buying a home means you can stay in one place for a time. It's typically recommended you commit to a house for at least five years.
- Do I have emergency savings? Issues can arise even before you're a homeowner, but when you own a house, you're more financially responsible when emergencies happen. If you have damage to your home that isn't covered by your homeowners insurance, you need a fund to cover the expenses.
- How much debt do I already have? When you apply for real estate loans, we'll take a look at how much outstanding debt you have. This will help us determine which mortgage is right for you. If you have a lot of debt on your plate, you may want to pay down some of your balances before buying a home to avoid financial strain.
- What is my credit standing? We also check your credit history and score. Higher scores can yield more favorable loan terms.
- Do I have enough saved for a down payment? Homebuyers supply a percentage of the home's appraised value when getting financing. The percentage varies based on the loan you're seeking.
- What does my employment situation look like? We look at your career history to determine whether you've been stably employed for some time. If you've had mostly temporary or part-time positions, you may want to wait to purchase a home until you have a stable career that allows you to budget for your home expenses.
- What do I want out of a home? There are many reasons individuals become homeowners. Homeownership comes with stability, a growing investment and the ability to decorate however you want. If these and other benefits of owning a home appeal to you, it may be time to make the change.
For more information about smart ways to manage your finances, contact Landmark Bank.
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