Am I Prepared To Buy A House

Are you prepared to get a mortgage and buy a house? Read on to find out if you're ready for home ownership.

You have decided to buy house. You are probably very excited about the prospect and cannot wait to begin house hunting. Nevertheless, must ask yourself if you are truly prepared. Here is a list of the things you should have in place before you begin searching for your dream house.

Do you have the finances needed to purchase a home? When you go to the mortgage company to for a home loan, they will look at several items to make sure you will be able to pay them back. You need to have a stable employment history in order to prove that you are likely to stay employed in the future. A person who has had long periods of unemployment, for whatever reason, will be seen as a risk. As far as the banks are concerned, past employment is a predictor of future employment.

Your credit score is very important to the banks. This will tell them if you have defaulted on any loans in the past, or if you are already financially over extended. You need to get a copy of your credit report before you consider house shopping. You may want to pay off bills you have long forgotten. You may want to settle an old bill that you were unable to pay previously, for a lower the price. You may even need to fix errors on your credit report. Once all of the negative marks on your credit report are handled, you may still need to wait long enough to show a stable payment history. If you have not paid any of your bills late in a year's time, and owe nothing on past due bills, your credit score will be favorable enough to buy a house.

In addition to showing that you can repay your mortgage, you must have a down payment, which is a portion of the home price. Depending upon your credit rating and the type of loan you have, you will have to pay between three and twenty percent of the mortgage before you will be able to secure a loan. You may also need to prove that you saved this money and did not borrow it, which will overextend your credit. Having a down payment assures the bank that you will not walk away from the house and the loan because you have invested your own money in it.

Your debt to income ratio is vitally important to the bankers. Ideally, your debt to income ratio should be 28 percent or less. This means that 28 percent or less of you your income should be spent on household expenses. Your total debt should be no more than 36 percent of your income. Debt items include credit cards, personal loans, student loans, and car payments.

Finally, you must ask yourself if you have time to be responsible for a home. Homeowners must take care of maintenance issues, lawn care, seasonal care, and a great many other things that you would not have to do as a renter. If you are an extremely busy person with no time to do anything at home but sleep, you may want to put off your home purchase, or at least buy a town house or condominium.

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