Buying your first home is an exciting step into adulthood. Instead of writing a rent check every month, you’re investing in something that is truly yours. The house that you buy can be filled with memories, such as those surrounding your wedding and the birth of your first child — and that child’s first day of school. However, despite this excitement, it’s hard to know whether you’re actually ready to take the plunge. So look at your finances and lifestyle choices, and use these three signs to determine whether you’re ready to buy a home.
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The first few years out of college can be stressful for students. Most millennials stay at their jobs for only a few years before they make career changes or decide to change because of their lifestyles. However, after a few years, they’re able to settle down with enough experience to find something they like doing and can start working their way up the management ladder.
If you don’t expect to stay at your current company for more than a year or two, it might not be time to buy a house. The last thing you want is to take on a mortgage and then become unemployed. Or you could go through the process of buying a house and then sell it immediately when you accept a job in a different state. Wait until your career is stable before you buy.
You’ve Paid Off a Large Amount of Student Debt
Student debt plagues most young people who also try to balance rent, savings, and a social life. Many millennials live with their parents for a few years or share an apartment with roommates to reduce rent costs. If you’re getting ready to buy a house, try to pay off (or at least consolidate) as much of your student debt as possible. This way, you’re not paying a mortgage and student lenders at the same time.
You might also consider holding off on home buying if you have plans to return to school to pursue higher education. This way, you can pay your tuition fees first and avoid falling further into debt.
You Have Money Saved for Repairs
Homes come with multiple side expenses beyond the actual mortgage, insurance, and taxes. You also have to consider the cost of remodeling if you want to change the flooring and patio, along with unexpected charges when something breaks or needs to be replaced. Do you have enough money saved to cover the cost of a new roof? You don’t have to have a large nest egg, but it’s important to have money in savings to cover potential issues.
Most financial experts recommend saving 5 to 10 percent of your income each month. Over time, this will give you enough to cover most significant unplanned expenses.
In all likelihood, there’s no perfect time to buy a home. However, if you fit most of this criteria you should be able to handle the responsibility and costs of homeownership. If you’re still in doubt, talk to a financial advisor before you start daydreaming about paint and decor, and learn to create a plan toward buying a house.