Purchasing a home is a big step to take, financially—and it’s not one to be taken lightly. The question is, how do individuals know when they are truly ready to make the leap? A recent Business Insider article lists some of the common signs of homeowner readiness. Now, in a new statement to the press, mortgage professional Paul Hirschauer offers his take.
“Before buying a home, you need to make sure that you are in a safe financial position,” Hirschauer comments. “You need to make sure you will be able to keep up with your monthly mortgage payments, but also with insurance, utilities, and general home maintenance expenses.”
One good sign that a person is ready for homeownership is the presence of an emergency fund—separate from the down payment. “It’s always wise to have a thousand dollars or so stashed away for an unplanned vehicle breakdown, job loss, or similar emergency,” Hirschauer states. “You also want to make sure you save enough money for a down payment on the home. Ideally, these two funds will not overlap.”
In fact, it’s also smart to have some money saved even beyond the emergency fund and the down payment. “Unforeseen expenses always come up when buying a home,” reports Business Insider. “Closing costs alone, which can include anything from inspection fees to title insurance, can add an additional 5 percent to the final price of the home. It’s better to have a cushion on your down payment than to find yourself digging into your emergency fund or being forced to step away from the deal.”
Having a good credit score is another sign that a person may be ready for homeownership. “A FICO score of 760 or above is ideal,” says Hirschauer. “Anything less than that may adversely impact your interest rates, though securing a mortgage is still possible.”
Timeframe, too, can be a factor. According to Hirschauer, homeownership makes sense for those who are not planning to move for at least three years. “If you’re only planning to be in town for a short duration, renting might make more sense—but otherwise, buying is typically the more financially savvy option, so long as you meet all these other signs of readiness,” Hirschauer notes.
More information about Paul Hirschauer and his mortgage services can be found online at https://www.guaranteedrate.com/loan-expert/PaulHirschauer
Paul Hirschauer is a Senior Vice President of Mortgage Lending with Guaranteed Rate; based in Connecticut, Hirschauer is passionate about making his clients’ dreams of homeownership come true. He is one of the top 1 percent of loan originators in the country.
More information about Hirschauer and his services is available online at https://www.guaranteedrate.com/loan-expert/PaulHirschauer