When Should I Think about Buying a House?

By: TXRB Staff | 29 Dec 2021
Buying a house

If you’re wondering if it’s time to buy a house, you have a lot to consider. Buying a house is a big commitment, but it can be one of the best investments you make in your lifetime. The housing market is still booming and now can be a great time to jump into homeownership.

How do you know if now is the time for you? Consider these factors.

Are you Ready to Settle Down?

Think about your future. Are you ready to stay put in the area you’re in or considering moving to? It’s a lot easier to move annually when you rent, but when you buy, staying in the same house for at least 5 years provides the best rate of return.

Think about your job, the community you want to surround yourself with, and your level of commitment when deciding if now is the time to buy a house.

If you think this is a short-term purchase, consider the resale value of the area. How quickly do homes sell in the area and how fast do they appreciate?

Do you have a home to sell?

You can use your equity in your home for down payment on the new purchase. 

Not wanting to put all of the equity down on the new home? Check the capital gains stipulations on the IRS website. Here are the rules for selling a home and the IRS capital gains. Publication 523 (2020), Selling Your Home | Internal Revenue Service (irs.gov)

How’s your Credit?

You don’t need perfect credit to buy a house, which is good news. But you should have decent credit that shows financial responsibility.

Ask yourself:

  • Have I made my debt payments on time over the last 1 – 2 years?
  • Do I use my credit lines within reason, meaning do you have less than 30% of your credit lines outstanding?
  • Do I have any collections or public records that may make it hard to get a mortgage?

Is your Income Stable?

Next, consider your income. Is it stable enough to support a mortgage payment? If you’re buying a ‘forever home,’ you could have a mortgage for the next 30 years. Does your income and career support this?

Do you Have Money for a Down Payment?

There are many low and no down payment options today but investing in your home is a great way to get an even greater rate of return. Most borrowers need at least 3% – 5% down, but a 20% down payment ensures you don’t have to pay mortgage insurance, which can save you even more on your mortgage.

Along with your down payment, you’ll need between 3% – 5% of the loan amount to cover the closing costs. If you haven’t saved yet, now is a great time to budget money to put aside for the down payment so you get the best rate and terms available for your mortgage.

Final Thoughts

If you’re ready to buy a house, now is a great time. Think about your current financial situation and what you plan for the future. If you’re looking for somewhere to put down roots and settle in with a community, buying a house is the best way to establish yourself.

When you’re ready to find the perfect mortgage to help you buy a house, contact us at Texas Republic Bank and let us help you get the financing you need.

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