At this point in your life, you may be raring and ready to buy your dream home. In fact, you’ve wanted a home for so long that you’re about ready to do anything to make this happen. But is it really the right time in your life to buy a home or luxury apartment?
You may be considering buying an apartment in The Cole in New York City, which you can find out more about here. Or you may want to move into a luxury apartment in Denver, like the one over here at www.carmelapartments.com/westend-denver-co. Or maybe you plan to move to the suburbs to buy a house and start a family.
In some situations, you’ll be ready to make this big step forward in life. In other situations, there could be a number of factors that end up putting the brakes on your decision to buy a home. We’ll take a look at some of the potential pitfalls you might face when it comes to buying new property.
- You Don’t Have Enough Money for a Down Payment
Ever since the housing crisis came to a head in 2008, banks have made it harder to get a mortgage for new property. One of the biggest issues that new potential homeowners face is coming up with the money to pay for the down payment. At this time, lenders need homeowners to have at least 20% of the asking price available to pay the down payment. Otherwise they aren’t even going to consider giving you a mortgage.
So, think about the type of house you’d like to buy and estimate how much it will cost. As an example, if you plan on buying a three bedroom home in Central Florida in the Orlando area, you’ll pay anywhere from $250,000-$300,000 and you’ll need $50,000 for your down payment at a minimum.
Do you have $50,000 stashed away somewhere? If not, it’s definitely not the best time to even consider buying a home. You have options though. You can tighten your purse strings and begin saving money to afford your down payment in the near future. You can take a second job or begin working a side hustle to earn extra income. Or you can ask for a raise or get a new job with another company that pays more.
No matter what, mortgage lenders aren’t going to loan you money if you cannot afford the down payment. So get moving and make something happen so you can come up with the down payment money sooner rather than later.
- Do You Make Enough Money to Afford the Monthly Payments for Your Future Home?
Let’s stick with our previous example. If you’re buying a home for $250,000 and you have $50,000 available for your down payment, the lender will now check your income and expenses to make sure you’ll be able to pay your monthly obligation of them.
If for some reason the numbers do not work out, you’ll need to make adjustments, get a better job, start working a second job, or consider buying a smaller home.
- How Is Your Credit Score?
If your credit score is in the toilet with all three credit bureaus, you obviously aren’t ready to buy a new home. Take the necessary steps to improve your credit by any means necessary. Try to get your credit score above 700 or even higher to become a good candidate to qualify for a mortgage with a lower interest rate.
It may be possible to finance a house when you have poor credit, but it’s going to be difficult. As you can see, you just might not be ready to buy a home at this point in your life. So if that’s the case, continue leasing until your financial situation turns around and you can afford a home much easier.