Let’s test your home-buying readiness level. If you can answer yes to all four of the characteristics of a person who is ready to buy, you are likely a great candidate to begin looking for a property of your own.
1. Financial Finesse
Let’s face it, buying a home is one of the most important financial decisions you can make. Your ability to manage your current expenses is an indication you are on the right track. Take a look at your credit score – your credit score is high, and you will have a better chance to get a mortgage. It is a sign that you will be able to actually pay your mortgage in a timely fashion. You plan to spend no more than 36% of your current income on debt payments (including the new mortgage).
What can you really afford in terms of a monthly payment? You may need to add in monthly fees like insurance, taxes, homeowner’s association fees, and utilities. Most people recommend an all-in monthly payment of less than 25% of your net income (take-home pay) so as not to stretch yourself too thin. You can afford to spend 28% of your income on your monthly housing costs, so you are on the right track.
Buying a home can cost more than just the down payment up front. A $500,000 house would have at least a $17,500 down payment. But you may also need to come up with closing costs, taxes, insurance, and have money left over to spend on initial expenses to make your home livable. Even ‘move-in ready’ homes will need movers (unless you have a bunch of friends), new window treatments, rugs, furniture, and other household items that you might not have been able to bring with you from your previous residence. The down payment itself would be at a minimum of 3.5% if you qualify for a special loan, and 20% for a standard loan. You have saved for a down payment and incidental expenses.
3. Willing to Put Down Roots
You are looking forward to settling down. You have found a community that you would want to live in for a few years. You realize that it would not make sense to just sell the home again in a few months if you decide you don’t like your job and want to move across the country. Your home is an investment, and you know it may take a few years (5 to 7 years is recommended) to generate a decent return on your investment.
4. Maintenanced Minded
Time and chance happen to everyone, and the mundane maintenance issues are no exception. In your first week, your water heater might decide to kick the bucket. Or you have a toilet that keeps clogging. You can’t call the landlord because, surprise, you are the landlord! You are ready to pay to fix it, or learn how to fix it yourself (but luckily, for this we have youtube.com)!
If you think you may be ready to buy a home in Anaheim Hills, Brea, Yorba Linda and Fullerton (and the surrounding areas), The Ron Arnold Team would love to help Contact us today!