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All over the country, homes are selling like crazy. They're being snatched up as soon as they go on the market, and home buyers are willing to pay more to get the home they want. In fact, you can probably name several friends who are looking to buy a home in the next few months.
Conditions in the housing market have changed so quickly that it's easy to get caught up in the frenzy and catch house fever yourself. But before you hop on that bandwagon, take our quiz to find out if you are truly ready to buy a home this year.
Think You're Ready? What's Next?
The best place to start your house hunt is by talking with a professional real estate agent. They can help you find a home that fits in your budget based on your financial goals. Dave's real estate Endorsed Local Providers (ELPs) understand how important it is to you to buy a home you can afford, so you can trust that your ELP won't pressure you to consider homes that would bust your budget.
Let us help you find your ELP today!
Not Ready? We Can Help You Get There.
To reach your goals of homeownership, complete your action items:
1. Get out of debt.
If you have any debt, your focus right now is to pay it off. Statistics show the median American household has more than $16,000 in credit card debt, the average auto loan exceeds $30,000, and the median student loan debt is more than $49,000. Add in the average monthly mortgage payment for an average $173,000 mortgage debt, and you've got a recipe for bankruptcy.(1) If you want to buy a home and have peace of mind, pay off your debt before you take the next step toward homeownership.
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2. Prepare for the unexpected.
Once you're out of debt, it's time to build your emergency fund of three to six months of expenses. Now you'll have the cash to take care of unplanned expenses (like a storm-damaged roof) or pay the bills (including your mortgage payment) if you lose your job. It's one extra bit of insurance against Murphy—you know, Murphy's Law:the idea that whatever can go wrong will go wrong.
3. Save for a down payment.
While Dave prefers you use the 100%-down plan and pay cash for a home, a conservative 15-year fixed-rate mortgage with a monthly payment that's no more than 25% of your take-home pay is also an acceptable option. You should have a down payment of at least 10%, but 20% is even better. With a 20% down payment, you'll avoid private mortgage insurance costs. You can start socking away money for your down payment after you've built your emergency fund.
Want to learn more about how to save up a down payment for a house fast? Our 5-Day Home Buyer Savings Plan will help you discover simple tricks to save a five-figure down payment by this time next year!
Make it a goal to overcome these obstacles before you buy, and you'll be on your way to owning your home the right way.