Are You Ready to Buy a House?

Buying a house is the American dream. After my husband and I were married, we lived in an apartment for about a year and a half and then we purchased our first home. It's almost a foregone conclusion that at some point in your life, you're likely to own your own home. However, when do you know that it's time for you to take the splurge and buy your own home?

You have your finances in order - Before you can buy a house, it's important to have a budget in place that works for you. You'll need to have enough money to pay for a mortgage, property taxes, maintenance, and everything else that goes along with owning a home. Buying a home is a big investment, and you want to make sure you can really afford it. If you have any consumer debt, you'll want to pay that off as quickly as possible before buying a home.

You have good credit - Most likely if you're buying a home, you will need to take out a mortgage for at least part of the purchase price. Make sure you have a good credit score to get the lowest interest rate possible for your loan and then get preapproved for a loan before you start looking at houses.

You have a sufficient down payment - These days, most banks require you to make a down payment of at least 10 to 20% in order to take out a mortgage. Twenty percent down is the best, if at all possible, since you won't have to pay PMI (Private Mortgage Insurance), which can get expensive.

You plan on staying in your house for at least 5-7 years - Closing costs and realtor fees to sell your house can really add up, so you want to make sure that you're going to live in your house long enough to make paying those fees worthwhile. If you plan to move often, it's likely more cost efficient to just rent.

You have an emergency fund - It's Murphy's Law that something is going to go wrong. If you want to buy a house, make sure you have a sufficient emergency fund to pay for any unexpected expenses that may come up. Typically, it's best to have 3-6 months of expenses in your emergency fund that will cover mortgage payments in case of a job loss. Plus, you want to have a buffer for any unexpected large maintenance costs.

Owning a home is not for everyone, but if you want to take the plunge, make sure you have realistic expectations and know what you're getting into. What about you? When did you feel ready to buy a house?

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