To distinguish between wanting to buy a home and actually being ready to do so, we turned to Shelby McDaniels, executive director of corporate home lending at JPMorgan Chase. McDaniels’ tips can help you decide if now is the time to buy a house, or if you’re better off renewing your lease and renting for another year. If you think you’d like to buy a house someday in the near future, working toward these signs can help you get ready; if you already happen to have your finances in order but have been waiting to take the leap, it may be time to consider when the timing will be right—especially with many housing markets in overdrive right now. If you can meet all of these requirements, start researching asking price and home values in your area, because you’re ready to make a down payment on a house: Homeownership lies in your future. “Some home loans may require far less of a down payment (between three and five percent), and the industry average is typically within six and eight percent,” she says. So that down payment may not have to be quite as large as you thought, but a larger down payment can mean better mortgage terms and make it easier to pay off your mortgage early. A higher credit score—essentially anything in the 700s or higher—is considered excellent and can help you get a lower interest rate, ultimately saving you money on the cost of your home. If you don’t already know your credit score, you can easily find it online with monitoring tools; some even offer tips and help for raising your credit score. Some banks also offer free credit score tracking. To get started, head to annualcreditreport.com, a federally authorized site that allows you to check your credit reports for free each year. It won’t show you your credit score, but it will help you check for score-lowering debts on your credit report; if you see any red flags or suspicious activity, you’ll want to address them before trying to buy a home. RELATED: How to Improve Your Credit Score Post-Pandemic “While there is no way for a buyer to completely avoid paying these fees, there are ways that homeowners can save on them,” McDaniels says. “Some banks offer help with their closing costs for buyers if they use the bank to finance their purchase.” Sometimes, global or national market factors mean it’s not a good housing market for buying a house—for instance, right now, interest rates are low, but home prices are skyrocketing. If you’re able to wait for the market to cool, you may be better off in the long run. If you have a lender you trust and are able to work with, and interest rates are low (meaning you’ll pay less over the life of the loan), you’ve got a good mortgage option: Time to start house shopping.
