Since our nation’s housing market is currently leaning in the favor of buyers, many are taking advantage of the low mortgage rates and home prices and venturing out onto the Chicago North Shore Real Estate market. You probably know of friends and family who’ve recently bought a home and you may be wondering if now is a good time for you to buy as well.
If you’re a first time home buyer, this can be especially tricky to differentiate between now being a great time to buy because of the current real estate market and now being a great time to buy because you’re ready to be a home owner. Whether you’re new to the home buying process or are considering buying a new Chicago North Shore home, we’ve gathered ten signs that determine if you’re fully prepared to buy a home.
1. You’ve determined why you want to buy- Evaluating why you want to buy a home is crucial. Are you the one who wants to buy a home and take on that responsibility or do you have outside pressures that make you feel that you need to buy? Only you know how your finances, personal goals and lifestyle will fit into the home buying process and if you’re not sold on buying; don’t. If you know that you do want to buy a Chicago North Shore home before the end of the year; make sure you determine what you’re comfortable with and stick to it.
2. You’ve been paying attention to home prices- You will need to know what home prices are like in the North Shore area before embarking on your house hunt. Of course your Chicago North Shore Real Estate agent will give great insight into the current home price trends. Having an idea of where the market has been and where it’s going will help you determine if now is the time for you to buy.
3. Home prices are stabilizing in your area- Playing off of the previous point, you want to determine what the Chicago North Shore Real Estate market looks like. It seems that the market will continue to stabilize itself, which is great news! Ask yourself how long you plan to stay in your new home. If you only plan on living in the home for a few years; the stabilization of the real estate market will play a larger role. However, if you’re planning on living in your North Shore home long term; you can rest assured that the market will only continue to climb upward and that if you ever plan on selling, the market will be healthy for a home sale.
4. You’re saving money- This seems like a very basic point, but a very essential one. The days of “no money down mortgages” are gone and most lenders require at least 5% down. You will also need to make sure that you have additional money for things like closing costs, as well as money in the bank when all is said and done. Lenders are becoming more strict and want to know you can back up the purchase of a home.
5. You have a solid credit score- Credit scores are moving to the forefront of being approved for a home loan. Most lenders are expecting a credit score of 600+ even for FHA loans. A good credit score will not only help you qualify for a home loan, but can lower your interest rate, which can save you thousands of dollars in the long run.
6. You’ve created a home-buying budget- If you’ve taken the time to create a home-buying budget chances are you’re serious about buying a home and want to go about it in the best way possible. It’s imperative to establish your budget prior to talking with lenders. Just because you are approved for a certain amount on the loan, does not mean that’s what you can actually afford. Lenders don’t take your extended finances into consideration, but will look at your income. Be sure to stick within your budget to avoid foreclosure and heartache in the future.
7. You’ve researched your mortgage options- It’s important to research which type of mortgage is best for your financial situation. Getting a fixed or adjustable-rate mortgage will depend a lot of your long term goals. Your Chicago North Shore Real Estate agent will also be able to help you determine which option is better for you and can walk you through the pros and cons of both.
8. You’ve been pre-approved- Getting pre-approved before you meet with a lender can save you time and will be a good indicator of any financial issues that need to be addressed. Things such as credit or income problems are items you want to take care of before trying to get approved for a home loan. Sellers will also take you more seriously if you have your financials in order.
9. Your debt is under control- Another way to test if you’re ready to buy a home is if you’ve paid down your debts. Lenders will look at your DTI, your debt to income ratio, and if your combined debts (mortgage and other debts) are more than 36% of your yearly income; chances are you will have a hard time qualifying. Each lender varies on this amount, but making the serious decision to buy a home can’t be taken lightly as it may have been in years past. The housing market is really attempting to wipe its slate clean to help lay the ground work for a healthy future.
10. You’re looking at all of your options- Keeping your options open is key in buying in today’s market. Whether a short sale, foreclosure, or regular home; there are many options that can prove to be great deals. Your Chicago North Shore Real Estate agent can help you determine which type of home is right for you.
2. You’ve been paying attention to home prices- You will need to know what home prices are like in the North Shore area before embarking on your house hunt. Of course your Chicago North Shore Real Estate agent will give great insight into the current home price trends. Having an idea of where the market has been and where it’s going will help you determine if now is the time for you to buy.
3. Home prices are stabilizing in your area- Playing off of the previous point, you want to determine what the Chicago North Shore Real Estate market looks like. It seems that the market will continue to stabilize itself, which is great news! Ask yourself how long you plan to stay in your new home. If you only plan on living in the home for a few years; the stabilization of the real estate market will play a larger role. However, if you’re planning on living in your North Shore home long term; you can rest assured that the market will only continue to climb upward and that if you ever plan on selling, the market will be healthy for a home sale.
4. You’re saving money- This seems like a very basic point, but a very essential one. The days of “no money down mortgages” are gone and most lenders require at least 5% down. You will also need to make sure that you have additional money for things like closing costs, as well as money in the bank when all is said and done. Lenders are becoming more strict and want to know you can back up the purchase of a home.
5. You have a solid credit score- Credit scores are moving to the forefront of being approved for a home loan. Most lenders are expecting a credit score of 600+ even for FHA loans. A good credit score will not only help you qualify for a home loan, but can lower your interest rate, which can save you thousands of dollars in the long run.
6. You’ve created a home-buying budget- If you’ve taken the time to create a home-buying budget chances are you’re serious about buying a home and want to go about it in the best way possible. It’s imperative to establish your budget prior to talking with lenders. Just because you are approved for a certain amount on the loan, does not mean that’s what you can actually afford. Lenders don’t take your extended finances into consideration, but will look at your income. Be sure to stick within your budget to avoid foreclosure and heartache in the future.
7. You’ve researched your mortgage options- It’s important to research which type of mortgage is best for your financial situation. Getting a fixed or adjustable-rate mortgage will depend a lot of your long term goals. Your Chicago North Shore Real Estate agent will also be able to help you determine which option is better for you and can walk you through the pros and cons of both.
8. You’ve been pre-approved- Getting pre-approved before you meet with a lender can save you time and will be a good indicator of any financial issues that need to be addressed. Things such as credit or income problems are items you want to take care of before trying to get approved for a home loan. Sellers will also take you more seriously if you have your financials in order.
9. Your debt is under control- Another way to test if you’re ready to buy a home is if you’ve paid down your debts. Lenders will look at your DTI, your debt to income ratio, and if your combined debts (mortgage and other debts) are more than 36% of your yearly income; chances are you will have a hard time qualifying. Each lender varies on this amount, but making the serious decision to buy a home can’t be taken lightly as it may have been in years past. The housing market is really attempting to wipe its slate clean to help lay the ground work for a healthy future.
10. You’re looking at all of your options- Keeping your options open is key in buying in today’s market. Whether a short sale, foreclosure, or regular home; there are many options that can prove to be great deals. Your Chicago North Shore Real Estate agent can help you determine which type of home is right for you.
After reviewing these signs of being ready to buy a home, you may feel even more leery about jumping in to the Chicago North Shore Real Estate market; and that’s okay! You need to be ready for such a large investment and it may just mean waiting a little longer. Or you just may have more questions that you want answered and we would love the opportunity to talk with you!
Whether you’re fully prepared to buy a Chicago North Shore home or want to explore your options a little more, feel free to contact us anytime! We’re here to help!
The Thomas Team
@ Properties
@ Properties
Chicago's #1 Real Estate Brokerage
