If you were dreaming about buying a home this time last year, don’t feel bad. It takes time to achieve such a major financial goal. But the good news is that 2014 can have a much happier ending. Here are four signs that 2014 is your year to leave renting behind for good.
You live within a budget.
You can’t wait until you’re a homeowner to decide that you’re going to create a financial plan – and stick to it. Those who are best equipped to handle the challenges of homeownership already understand the value of planning for expenses, savings and emergencies.
You have a healthy savings account.
Not only will you need money for a down payment and closing costs but you want to have at least $3000 to $5000 in the bank on top of that. Lenders want to make sure you’ll be able to handle unexpected expense that occur during the homebuying process, and you want to make sure you can cover any emergencies that come up.
You’ve paid off much of your consumer debt.
If 2013 was the year that you paid off a credit card or made a substantial dent in your consumer loans, you’ve succeeded in putting yourself in a better position to buy a house. Not only does paying off debt raise your credit score, but lenders want to see people who aren’t over-extended with debt when they’re making their lending decisions. Another benefit of paying off your debt: you have more money available to pad your savings account.
You didn’t make any major purchases in 2013.
If you made the wise decision to keep your old car tuned up and on the road rather than trading it in for a new set of wheels, you’re in the right mindset to buy a house. The last thing you want to do before buying a house is finance a major purchase such as a car or a timeshare. Whenever you take out a new loan, your credit score drops. You want your credit score to be going in the opposite direction when you’re planning to buy a house.
Every major goal is worth working for and waiting for. If you’ve made wise financial choices in 2013, or you’re ready to make better choices this year, here’s to 2014 being the year that you realize your homeownership dream.