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How to Know If You Are Ready to Buy a House

Think you’re ready to buy a house? Are you sure? Do you have the appropriate funds? Would you be financially prepared if a huge home emergency happened (like a flooded basement perhaps)? And are you really ready to settle in one area? All these questions (and more) should be considered when you’re looking for your first home. Let’s dig in and take a look at your entire situation to see if you are really ready to buy a house.

How to Know If You Are Ready to Buy a House

Buying your first house can be quite a scary ordeal. Are you really ready? It seems like such a huge commitment, and such a HUGE debt load too! Buying one of the biggest assets of your life at your young age? YIKES!

But, you know what? It really shouldn’t be that scary — as long as you’re prepared that is. And, after reading this article, I trust that you will be prepared and you’ll make the right decision for you.

If you want to know if you are ready to buy a house, there are two basic questions you should ask yourself:

  1. Am I financially ready to buy a house?
  2. Am I emotionally ready to buy a house?

This likely leads to one more question: “How do you really know?”

What qualifications would tell you that you’re financially ready? And what does it really mean to be emotionally ready? We’re going to dive deeply into each of these questions so you can confidently state your answer. And, at the end of the article, we’ll provide you a full checklist to see if you’re truly ready for that first-time home purchase!

How to know if you are ready to buy a house. Want to know? Check out the 11 question checklist!Are You Financially Ready to Buy a House?

Do you really have enough money to buy a house at this point? (Sidebar…Don’t ask the bank this question. They’ll loan you just enough money to buy the house of your dreams, but leave you broke for everything else in life!)

First, the basic questions to decide if you are financially ready to buy a house. 

If you can’t answer yes to these, you’re simply not ready to buy a house:

  • Are you completely out of debt?
  • Do you have an emergency fund to cover 3-6 months’ worth of expenses?
  • Do you have a down-payment of at least 10% of the purchase price?
  • Can you afford a 15 year fixed rate mortgage? (ie. the payments are 25% of your income or less)

“Derek….really?” …You may be asking… 

Yes, really!

If you have a bunch of student loan debt and you’re looking to buy a house with a 30 year mortgage, I’d say absolutely not! You’re not financially ready.

Why do I say that?

Because you’re going to be house poor for decades!

Think about it. You’ve got that student loan for the next 10 (or more) years of your life. You then decide on a 30-year mortgage because you can get a nicer house that way. Buuuut “nicer” meant more expensive and that means a heavy payment that you can just barely afford.

You’re going to love showing off your house to your friends, but after a year or two you’ll absolutely hate it because you’ll be shackled to it. 

  • No big vacations
  • No splurges on vehicles
  • And, when the next emergency pops up, you’ll be forced to put it on your credit card…because all your money is going toward your mortgage…that you still have 28 years to pay on. 

It’s just not worth it. 

Pay the absolute minimum rent you can right now, pay off your debts, save up an emergency fund, and then save up a wad of cash that you can put toward your home down-payment. Yes, I realize home values are insane right now and they’re going up like crazy, but that’s no reason to make a financially stupid decision for yourself today.

Get through the above steps as fast as possible. Many can get there in two years or less, and I bet you can too!

Related: FREE Debt Snowball Calculator – How Soon Could You Be Debt Free?

Then, beyond the basics above, you’ve got to think about things such as:

  • If something broke within the first few months, would I have the money to fix it?
  • How stable is my job? Is there a chance I could lose it and not be able to keep up with my mortgage payments?
  • If the worst happened, do I have a financial plan that would keep me from losing my house?

I know, I know. This sounds like a lot, but you’re likely borrowing hundreds of thousands of dollars here, so it’s important to be as prepared as possible. The more you think about this stuff now, the fewer headaches you’ll experience in the future.

Be honest with yourself. After reviewing the questions above, are you financially ready to buy a house?

Related: How Much House Can I Afford?

Are You Emotionally Ready to Buy a House?

Perhaps you passed the financial quiz with flying colors. Congratulations! Now it’s time for step two, your emotional preparedness… Are you emotionally ready to buy a house?…

What do I really mean by this? Emotionally ready…?

I’m using the term quite broadly actually. I’m not necessarily asking about your mental health or your psychiatric state. Instead, I’m more asking about where you see yourself in the near future, as well as how you can handle unexpected issues. See below for a bit more clarity on what I’m searching for – ie. what else is important if you’re thinking about buying a house.

If you’re emotionally ready to buy a house, I would expect you to answer ‘yes’ to all the questions below:

  • Do you intend to stay in that home for least 5 years?
  • If you’re buying the home with a significant other, is your relationship healthy? And do you expect it to stay healthy long-term?
  • If you’re single, do you expect to stay single for at least the next two years?
  • Homes will have issues. Can you handle stressful surprises (water leaks, plumbing issues, tree limb damage, etc.)?

Why is all this important?

I’ve seen people buy homes when they knew they’d be moving in two years or less. I can’t think of a time when it worked out well for anyone. Either they sold the home at a loss (after considering realtor fees, closing costs, taxes, etc.), or they rented it out and it got trashed…which again, means they lost money.

If you’re going to buy a house, make sure you’re thinking at least five years ahead with your purchase.

Second, if you just can’t handle the stress of home ownership (ie. unexpected events at the least convenient times), then maybe it’s not for you.

My First-Time Home Buying Experience – Was I Ready?

It’s time for me to come clean with my own experience… 😉 

What about me? Was I financially ready to buy a house? 

Here are the answers to my own ‘home buying preparedness’ questions:

  • Are you completely out of debt?
    • Yes, we were completely debt free
  • Do you have an emergency fund to cover 3-6 months’ worth of expenses?
    • Mmm, no, we had maybe a grand after we bought our first house. NOT ENOUGH!!
  • Do you have a down-payment of at least 10% of the purchase price?
    • YES! 10%
  • Can you afford a 15-year-fixed mortgage? (ie. the payments are 25% of your income or less)
    • Yup! Did a 15-year-fixed mortgage
  • If something broke within the first few months, would I have the money to fix it?
    • Negative…
  • How stable is my job? Is there a chance I could lose it and not be able to keep up with my mortgage payments?
    • Yes, quite stable. I still work at the same company today!
  • If the worst happened, do I have a financial plan that would keep me from losing my house?
    • Yes, side hustles baby! Oh, and my wife worked too.
  • Do you intend to stay in that home for least 5 years?
    • Yup!
  • If you’re buying the home with a significant other, is your relationship healthy? And you expect it to stay healthy long-term?
    • No… We fought all the time, and she actually didn’t want to buy a house. She wanted a young-professionals condo. We should have stayed renting and worked on our relationship…in hindsight.
  • If you’re single, do you expect to stay single for at least the next two years?
    • N/A
  • Homes will have issues. Can you handle stressful surprises (water leaks, plumbing issues, tree limb damage, etc.)?
    • Yup! I’m a pretty cool cat! 😉

How did it work out for me?

Based on my own quiz question for buying a house…I think I failed – both on the financial and the emotional front! And…that house purchase really didn’t work out for me…

Just one year after our home purchase, my wife and I got divorced. 

I barely scraped together the money to pay her half of our home equity (I kept the house). BUT, one bright spot out of all this. We bought that house for $75,000. I sold it seven years later for $156,000!

Are You Ready to Buy a House? A Complete Checklist!

It’s best if you answer ‘yes’ to all of the below questions (all that relate to you anyway):

  1. Are you completely out of debt?
  2. Do you have an emergency fund to cover 3-6 months’ worth of expenses?
  3. Do you have a down-payment of at least 10% of the purchase price?
  4. Can you afford a 15-year-fixed mortgage? (ie. the payments are 25% of your income or less)
  5. If something broke within the first few months, would I have the money to fix it?
  6. How stable is my job? Is there a chance I could lose it and not be able to keep up with my mortgage payments?
  7. If the worst happened, do I have a financial plan that would keep me from losing my house?
  8. Do you intend to stay in that home for least 5 years?
  9. If you’re buying the home with a significant other, is your relationship healthy? And you expect it to stay healthy long-term?
  10. If you’re single, do you expect to stay single for at least the next two years?
  11. Homes will have issues. Can you handle stressful surprises (water leaks, plumbing issues, tree limb damage, etc.)?

And here’s a printable checklist if that works better for you!

How to know if you are financially ready to buy a house. Use this checklist to know for sure!

If you couldn’t answer yes to at least 7 of these questions, you have no business buying a house!

Answer 7 to 9 questions with a yes, and I’d say you’re ‘ready enough’.

If you pulled out a score of 10, then you’re a rock star! Heck yeah! Buy that house!

How about you? Are you ready to buy a house?

Grow Rich Housing Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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