Should I buy a house now or wait?

Buying a house is the biggest purchase most of us will ever make. So it makes sense to ask when the right time is to buy our first home. There are several factors to consider. This list will help you make that decision.

#1 Have Some Money Saved Up

Depending on the type of loan you decide to go with you will need anywhere from 0-20% to put down. For more information on this, read my post: How Much Money Do You Need to Buy a House for the First Time?

#2 Have Your Debt Paid Down or Paid Off

Mortgage lenders will look at how much debt you have relative to your household income, so the less debt you have, the better. It is good to have some credit history so that there is a credit score to work with. If you don't have any credit history, the best way to establish credit is with a secured credit card. Also keep in mind that any purchases you make after you go under contract but before closing can affect your credit score negatively enough to prevent you from closing! So don't buy anything until after you leave the closing table!

#3 Have a Steady Job

Make sure you have a few months of stable employment be able to provide paystubs and bank statements reflecting that you have consistent reliable income. This shows lenders that they can rest assured that the mortgage will be paid off in full.

#4 Don't Be "House-Poor"

"House-Poor" means you can afford to make your payments and nothing else. What good is that amazing house if you can't afford to go out to dinner or the movies once in a while? Make sure you know what you can afford before you go house-hunting. You lender will help you find that out, but you should also know what will work for you and your family. A good rule of thumb is a mortgage payment that is about 30% of your monthly income.

Plan For Emergencies

When the roof leaks, or the hot water heater goes out, you will need an emergency fund to pull from. Homeowner's insurance doesn't always cover everything so it is always best to be prepared. Dave Ramsey suggests six months of living expenses. This is not only a good rule of thumb in the event of needed repairs, but also covers you in the event you get laid off from work.

You're Not Going Anywhere

If you are a bit of a nomad and move from town-to-town or even state-to-state, buying a home may not be the best thing for you. You may find that renting works best for you and your needs. But once you've laid down roots and plan to stay in one place for the long haul, say five years or more, then buying might be the better option for you.

If you have decided that you are ready to buy a house now, you should check out my Home Buyer Q&A with Sherry Payne. If you have decided to wait and save up some money or just to settle down later, then I hope this gave you a good road map for the future. Either way, I hope you will share this with anyone that you think might benefit from this information and leave a comment with any questions your may have.

Talk to you again soon!