Your lease is up for renewal soon but you can't help but waver between another year of renting and taking the plunge to finally buy your first home. While purchasing your first home can be scary, it can also be financially beneficial and give your life more security. Here are four signs that you're ready to buy your first home:
You Have Plenty of Savings
If you are currently living paycheck-to-paycheck and don't have a financial safety net, this is not the right time for you to start looking at real estate. Even though you may find a home with a mortgage that is equivalent to your current rent, buying a home involves additional expenses like real estate closing fees and often a hefty down payment.
Ideally, you will have emergency savings as well as a separate savings account for your down payment and related expenses before you buy. If you're not quite there yet, set a target date and make a plan. You may want to apply for better-paying jobs, ask for a raise, start a side business on the weekends, or even move in with your parents temporarily while you save up.
You Plan to Stay in Your Current City
Because buying and selling a home involves transactional costs and fees, buying a home you don't plan to keep for very long rarely makes sense. One possible exception is if you plan to rent out your home after you move, but keep in mind this would require being approved for a mortgage on a second home, which can be difficult.
The Rental Market is Too Tight
In some parts of the country, rental markets are highly competitive, with high monthly rent and more demand than availability. In this type of market, it can definitely make financial sense to buy a home instead, especially if you are willing to tackle a fixer upper that you get for a great price. You will no longer have to worry about your landlord raising rent every year or competing against tons of other renters when applying for an apartment.
You Daydream About Home Improvement Projects
If you find yourself fantasizing about remodeling a kitchen or building a back patio, it may be time to buy your own home. Renting limits how much you are able to change and customize your living space, while also removing a lot of the financial incentive for doing so since you won't benefit from boosting the value of a home you don't own.
If these all sound like you and your current situation, this is probably a great time to buy your first home. Start by scheduling a free consultation with a real estate agent.