Buying your first home is one of the biggest financial decisions you’ll make. With careful planning and the right mindset, homeownership can be a rewarding and long-term investment. But before you take the plunge, it’s important to ensure you’re truly prepared. Here are seven signs that indicate you may be ready to purchase your first home.
You Plan to Stay in the Area Long-Term
If you expect to stay in the same location for at least five years, buying a home could be a smart financial move. In many cases, mortgage payments can be comparable to—or even lower than—rent, helping you build equity instead of paying a landlord.
You Have a Solid Savings Plan
A strong nest egg is essential before buying a home. In addition to a down payment, you should have savings for:
- Closing costs
- Moving expenses
- Home maintenance and unexpected repairs
- An emergency fund for at least 3-6 months of expenses
The more you’ve saved, the better positioned you’ll be for the financial responsibility of homeownership.
You Have a Reliable Source of Income
A steady and dependable income is critical for long-term homeownership. Since mortgage payments are a consistent financial obligation, you should feel confident in your ability to make monthly payments without financial strain.
Your Debt is Under Control
Your debt-to-income (DTI) ratio is a key factor lenders consider when approving a mortgage. Most lenders follow these guidelines:
- Monthly housing costs (mortgage, taxes, insurance) should not exceed 28-33% of your gross income.
- Total debt (including mortgage, credit cards, student loans, and car loans) should be under 38% of your total income.
If your debt is manageable and you have a healthy credit profile, you’re in a good position to move forward with buying a home.
You Have Good Credit
A strong credit score improves your chances of loan approval and helps you secure lower interest rates. A higher score can mean:
- Better loan terms
- Lower monthly payments
- More mortgage options
If your credit score is in good standing, you’re in a great position to buy. If not, consider taking steps to improve your score before applying for a mortgage.
You’re Prepared for the Costs of Homeownership
Owning a home comes with more financial responsibilities than renting. Besides your mortgage, you should be ready for:
- Higher utility bills
- Homeowner’s insurance
- Property taxes
- Routine maintenance and unexpected repairs
Being prepared for these additional expenses is a sign that you’re ready for homeownership.
You’ve Been Preapproved for a Mortgage
Getting preapproved is a crucial first step in the homebuying process. It helps you:
- Determine how much home you can afford
- Show sellers and real estate agents that you’re a serious buyer
- Move quickly when you find the right home
Many real estate agents require preapproval before showing homes, making this an essential step in your journey.
Ready to Take the Next Step?
If these seven signs apply to you, you may be ready to buy your first home! At Mutual of Omaha Mortgage, we’re here to help guide you through the mortgage process and find the best loan for your financial situation.
Contact us today to get preapproved and start your homeownership journey!
