When to Buy a Home?

Justin Klonoski, Writer

There are a few factors to consider when deciding whether or not to buy your first house. You will need to evaluate your career outlook, debt-to-income ratio, the future of the economy, and current needs. Whichever home you decide to buy, it is important to create a plan for financing the house through closing costs, down payments, and paying off the mortgage. 

To start off, you should have the home you are looking at inspected by a trained professional for the quality and safety of your potential house. Make sure to ask for past documents of utilities such as energy bills that the previous homeowner paid for, so you do not get surprised by any unexpected costs. Finally, after coming to an agreement with the homeowner over the money paid for the house, you have to close the deal by signing lots of paperwork, often with an attorney present.

Once you own the house, do not pretend everything is perfect, and you do not have to worry about anything else. Create an emergency fund in case you need to repair a furnace or replace a roof and remember to do regular maintenance to keep your new house in good shape.

Your current employment and employment history is the biggest factor in determining whether to buy a home or rent for the near future until you bring in enough income to cover the giant financial burden that owning a home comes with.

Gina Pogol, a contributor for The Mortgage Reports, supports this notion of employment being a major factor for buying a home saying, “strong employment history proves you have a steady income and ability to make loan payments.”

To be safe, two years of consistent work in the same industry is needed to qualify for better terms on mortgage loans. Sometimes you do not need two years of consistent employment to qualify for mortgages, but those are usually in situations where the person seeking the loan has just graduated from law school or medical school and will begin working a high-paying job. Therefore, the quality of your work is put into consideration as well by the lender. 

Finally, when you buy a house, you should be able to put up at least 20% as a down payment because if you do not, you are subject to having to pay PMI (Private Mortgage Insurance), which makes it more costly per month to pay for your home. As a result, it would be wise for you to save up money once you have paid all your student debt for your new home.

Also, waiting until you are in a long-term relationship with a partner is another good idea as both of your incomes can be used toward financing a new home. Rushing into buying a house after you graduate college can be a very costly decision for your future. Do not put pressure on yourself to make one of the biggest decisions of your life. Take some time to go over the options available to you for housing and remember that renting for the short-term of your life is not a bad idea.

It is very natural to feel overwhelmed by all the options for your future home, but by doing your research and seeking out the help of others like real estate agents, attorneys, and even family members, you should feel confident in your search process.

There are several resources available to help you in your process of buying a home such as first-time homebuyer assistance programs offered by many state housing authorities, so I encourage you to take advantage of any opportunities provided to you.