Have you been considering buying a house? If you’re like most of us, you’ve probably also been wondering whether you’re really ready to do it. After all, it will likely be the largest financial transaction of your life – one that entails a lot of responsibility and up to a 30-year financial commitment. So, understandably, you don’t want to make the wrong decision. To help you out, we offer these 5 questions to ask yourself to make sure you are ready to buy a house in Miami.
1. What are my reasons for buying a house?
The first question you should ask is designed to help you get clear on your reasons for buying a house in Miami. You need to make sure you are doing it for the right reasons and that your goals and expectations are realistic.
Consider that many millennial homeowners regret their decision to buy a house because they didn’t do it for the right reasons. A 2019 report revealed that “51% of millennials have regrets about purchasing their homes. Among their biggest regrets are that their monthly mortgage payments are too high, the house requires too much maintenance, and the house has depreciated too much since purchase.” And another 2019 survey found that “63 percent of the millennial homeowners surveyed had buyer’s remorse. In this case, the top regret cited by those surveyed was unexpected maintenance or hidden costs.”
So, first, be sure you understand exactly why you want to buy a house and whether those reasons line up with the reality of home ownership. You can consult a Miami agent at 305.771.1710 for assistance in this regard.
2. How long do I plan to live there?
Next, before you buy a house, you determine exactly how long you plan to live in it. Certainly, unexpected life events can change this, but industry experts agree that you should plan to live in the house for at least three to five years.
It usually takes this long to just break even on the mortgage. So if you know that your job will require you to move soon or you plan to upgrade in a year or two, then you may not be ready to buy a hose right now.
3. Can I actually afford it?
The next important question you need to ask yourself is a financial one, and the answer requires brutal honesty: “Can I actually afford to buy a house?”
According to financial pros, your monthly mortgage payment should amount to no more than 25% of your gross income. And your total monthly payments – other debt combined with the monthly mortgage payment – should not exceed 33% of your monthly gross income. An honest assessment of affordability is absolutely essential.
4. Do I have a good DTI ratio and an emergency fund?
On a related note, you need to consider your debt-to-income (DTI) ratio. (Your lender will certainly look at this.) The DTI ratio involves the percentage of your monthly gross income that has to go toward paying monthly debts, and lenders use this to determine how likely you are to pay them back. A higher DTI ratio (with total debts above 36% of your total income) likely means that you aren’t ready to buy a house.
Also, in determining your readiness to buy a house in Miami, you need to look at your emergency fund. Homeownership means recurring expenses and those large unexpected expenses for repairs and upgrades like a new roof. So you need to have a good emergency fund to cover such costs. This is another thing your lender will look closely at as well.
5. Do I have an experienced, local agent?
Finally, you need to ask yourself whether you have an experienced, local Miami agent in your corner. A good agent can make the whole process go smoothly, as well as get you a better deal when it comes to those critical negotiations. So if you’ve determined that you are really ready to buy a house, contact us today at 305.771.1710.