With rent prices increasing all over the country, more millennials are making the leap to homeownership. If you're one of those considering buying your first home, here are four signs that can help you determine how ready you are:
1. If you're ready to make a commitment
Unlike renting, buying a house is a long-term commitment to the both the property itself as well as the surrounding area. If you feel comfortable with staying in one place for that long, you're in the ideal position to purchase.
Of course, you're not bound to one house forever, but as Bankrate points out, with all the money you'll spend on a down payment and mortgage fees, it doesn't make sense to stay temporarily. Buying a home is an investment that will take time and effort to earn back.
2. If your finances are in good shape
If you're already struggling financially, buying a home will only worsen that burden. However, that doesn't mean anyone with debt can't become a homeowner. It just means you need to evaluate how manageable it is and if you can handle taking on more.
Typically, the portion of your budget devoted to housing shouldn't exceed around 30 percent of your income. It's important to buy a house you can afford now, rather than bank on a potential raise or promotion. If you can afford the recommended 20 percent down payment, you're in good shape to make an offer. Keep in mind, there are also increasingly more options for home buyers to finance their mortgages in a way that works for them. Educate yourself on these so you know the best way to make your dreams of owning a house come true.
3. If it serves your future plans
Because your home will be a commitment, you'll need to consider how it serves your ideas for the future. You'll be buying with the money you have now – can that give you the space you need to start a family? Keep you in a location that's beneficial for your career? If your current finances don't allow you to find a space that you can grow into, then it's not worth making the plunge just yet. It's better to wait a little longer and save up the money to buy the house you need.
4. If you're prepared for the responsibility
As a renter, you had landlords and maintenance staff to help you through household problems. If you become a homeowner, that responsibility falls on you. While that doesn't mean you need to fix every leak or break yourself, you'll have to cover the cost of repairs, upgrades and renovations. It also means you'll need to do thorough research to hire the right people for the job. It's time-consuming to be a homeowner, but if you're up for the challenge, the experience can be extremely rewarding.