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Check Your Readiness to Buy Your First Home

Sunday, January 5, 2020

Buying your first home is one of the most exciting experiences you can have in life – and also one of the biggest financial transactions you’ll ever make. With that in mind, it’s important to make sure you’re completely ready for this milestone.

Before looking at Atlanta homes for sale, you first need to know if it’s the right time to be a homeowner. Here are some of the things to consider.

  1. Your finances are in order

    If you’re like the vast majority of first-time homebuyers, you will likely be financing your home purchase with a mortgage. To qualify for a home loan with favorable terms, you must have a good credit score. Generally, banks look for at least a “fair” credit score, or somewhere between 650 and 700. The higher your credit score, the better the loan options.

    In addition to your credit score, lenders will also look at your debt-to-income (DTI) ratio, or the proportion of your total debts, including the potential mortgage, to your monthly income. If you’re paying off major loans, such as a student loan or car loan, this could bring your DTI down, and consequently your chances of getting approved for a favorable loan. The ideal DTI is around 36% or lower.

    You can still obtain mortgage even with a low credit score and high DTI, but the loan amount may be less than what you would want. In addition, the loan will likely come with a higher interest rate or shorter term, or both.

  2. You have saved enough money for a down payment and closing costs

    It’s possible to obtain a home loan without a down payment if you meet the eligibility requirements. However, your mortgage options will be limited and you may have to pay higher interest rates, as well as mortgage insurance.

    In addition to the down payment, you also need to consider closing costs, which are paid when the buying process is completed and the sale is closed. Closing costs include professional fees, such as attorney’s, lender’s, and escrow fees, home insurance premium, and other costs incurred in the purchase of the house. The typical closing cost for buyers in the US is approximately $7,200.

  3. You’re ready to settle down in one place

    Are you ready to give up the nomadic lifestyle and stay put in one place, at least for the next five years? That’s how long it normally takes to build enough equity on a home and break even or make a profit when you sell. If you decide to move and sell the home earlier than this, you may take a loss.

    When you’re ready to set down roots, you must also have a good idea of the neighborhood you’d want to settle in. Find the neighborhood that best fits the lifestyle you want.

    In the Atlanta area, you get plenty of excellent choices for the right community. If you’re after easy access to offices and urban amenities like restaurants, shops, and bars, you can check your options in neighborhoods Inside the Perimeter or ITP. This is the area around Downtown bordered by I-285. You can find gorgeous homes for sale in Decatur, GA, as well as in Midtown, Inman Park, Virginia Highland, and others.

    If you prefer a more family friendly environment with plenty of wide-open spaces and close to the best schools in the area, consider cities and communities Outside the Perimeter, or OTP, including Sandy Springs, Marietta, and Forest Park.

  4. You’re ready for the costs of homeownership

    If you have been renting, most of your utilities and maintenance costs are likely included in your rent or are paid by your landlord. As a homeowner you’ll have sole responsibility for them. You must also prepare for other homeownership costs, including property taxes, home insurance, and homeowners’ association dues. Crunch the numbers to see if you can comfortably afford these expenses on top of your mortgage payments.

  5. You want more freedom to do as you please

    One of the best signs you’re ready to be a homeowner is when you look forward to living without the restrictions typically imposed on renters. When you own your home, you can come and go as you please, do all the renovations and improvements you want, be a pet owner, and so on.

Find the best home to match your needs and preferences. Get guidance from one of the top real estate agents in Atlanta. Call me today at 404.550.5113 or send an email to Natalie(dotted)Gregory(at)Compass(dotted)com.