Are You Ready to Purchase a Home?

Home ownership is a major part of what many people consider to be the "American Dream." It's important, however, that you are ready to take that leap, and here are some questions to consider.

1. How much house can you afford?

While you might want a large house in a new neighborhood, it’s important to be realistic about what you can afford, both for down payment and for monthly expenses. You might start out with an online mortgage calculator to give you a rough idea of your price point. 

2. How is your credit?

Before you start the process of looking for a home and trying to obtain a mortgage, take a look at your credit report and make sure your score is in good shape. If it's not, you may have trouble getting the financing you need, and you don't want to waste a lot of time only to find out that you're unable to buy a house. Ask your banker if they think your credit score will enable you to qualify for a house. If your credit score needs work, start putting as much effort as possible into bringing it up. Pay off as much debt as possible, and pay all your bills on time. Check your report again after some time has passed, and track your progress.

3. How much can you afford for a down payment?

The amount of money you currently have in the bank is also a significant factor in whether or not you're ready to purchase a home. In most cases, you’ll need funds for a down payment and closing costs, so be sure to save enough so you can afford it when you’re ready to buy a home. Talk to your lender to figure out how much you'll need.

4. Do you have the means to pay for other costs associated with purchasing a home?

Are you ready to pay for other costs that come with buying a home? In addition to the down payment, there may be taxes, homeowners insurance, closing costs, appraisal fees, escrow fees, document preparation fees, credit report fees, etc. You'll need to ensure that you're able to pay for these things when start the home-buying process. Talk to your real estate agent if there are concerns. On occasion, the seller may be willing to pay some of the costs.

5. What does your job security look like?

Financial security is a must when it comes to considering whether you are ready to buy a home. Even if you can afford it now, are you confident that your situation will remain adequate in the future? Much of this comes down to job security. If you've had a steady job for years and things are going well, there's a better chance you're ready to buy. If layoffs are possible in the near future, you may want to reconsider. It may even help to have a discussion with your employer to gain a sense of your future with the business.

6. Does purchasing a home align with your personal life?

Financial factors aren't the only things to take into consideration. Your personal life also plays a major role. For instance, are you married or engaged? Are you in a serious relationship that could lead to marriage? Does this person already own a home? These are the types of questions you should be mulling over before you make a decision.

7. Can you accept the long-term commitment?

While there are plenty of benefits to a mortgage, there's no question that having one is a major financial commitment that you'll have for years to come. This could be a drawback, especially if you may have to relocate multiple times. Be sure you are ready to settle down for the foreseeable future. Otherwise, you're in for a major headache when you have to go through the process all over again. If you do have to relocate, owning your home makes it harder to pick up and move.

8. Can you afford the monthly payments?

While the steadiness of a fixed-rate mortgage is reliable, your monthly payment may be higher than if you were renting your home. Some people will find this reason enough not to purchase a home. Make sure you are secure enough in your finances that you'll be able to afford the payments every month.

9. Do you have the money, motivation and skills to keep up with the maintenance that home ownership requires?

While home ownership gives you the freedom to make the changes to the property you want, it also requires you to take care of the place. If you rent, you may be able to get your landlord to take care of certain maintenance items, but when you own the home, this all falls upon you and any workers you hire with your own money. Before you purchase a home, ask yourself if you're ready to take on these responsibilities. It might cut down on your partying time and your vacation funds.

The new Zip-mortgage program is a great way to apply for a mortgage.*

Buying a home is a major life decision, and you should be sure it's really the route you want to take. If you know you are ready to build up home equity instead of making monthly payments to your landlord, Nevada State Bank has a new Zip-mortgage program you can use to apply for a mortgage online.

*Loans subject to credit approval. Terms & conditions apply, see a banker for details.

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC