Not Time To Buy Yet?

October 21, 2019

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You want to buy a home, but maybe the cards aren’t lining up in your favor right now.  Perhaps you’re not sure how long you’ll stay in your current job or you’re still paying down a loan and don’t want to take on any more debt at the moment.   Or maybe you’re happy where you’re at right now and can afford to wait to make such a big decision.  While you’re waiting, there’s time for you to plan for the day you’re ready to buy a home.

Compare buying versus renting.  How much will buying your home compare to how much you’re paying for rent?  You’ll also want to know how much money you’ll gain or lose when you leave an apartment versus selling a home.   With an apartment, the most you can lose is your security deposit when you leave.  With a house, you can lose up to 8 percent of your home’s price to a listing agent when you sell, so you may want to wait until the home’s value increases before you move.

Know how long you’ll need to stay put to break even.  When buying a home, you’ll first want to know how long you’ll need to stay there before your overall living cost is less than what you’d have renting.  Rent versus buy calculators you can find online are a good start.

Work for a good credit score.  Aim for the best-case scenario by striving for a score of 760 or higher.  This will help you get better interest rates on your mortgage loans.  Keeping your credit card use under 30 percent, making your payments on time, and opening any new credit cards several months before applying for a loan will all help.  Additionally, you can ask your lender for loans to help with phone bills, cable bills, and the like as a means of establishing a credit history.

Save money.  Discipline and consistency is key here.  Take your monthly income and subtract your bills.  You should have a leftover amount.  Now, decide how much of that amount you’ll put aside in a savings account every month.  This will help prevent you from spending money you otherwise might spend on unnecessary things.  Another option is to make deposits into your 401(k) (up to $18,000 per year) and then borrow up to 50% or $50,000 against your account for a down payment.