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It takes time to get ready to buy a home, but this could be your year.
Key points
- Buying a home requires you to become financially prepared.
- There are several milestones to hit, including improving credit and saving a down payment.
- You may be able to accomplish these tasks in 2022 if you have a solid plan.
Becoming a homeowner is a major life milestone, but it’s one you need to make sure you’re ready for. If you’re hoping to buy a home soon, here are a few key signs you’ll be able to make 2022 the year you get on the path toward owning a property of your own.
1. Your credit score is good — or you’re working on improving it
Most conventional lenders will not provide you with a home loan if your credit score is below 620. And with a score below around 700, you’re probably not going to get the most competitive interest rates. Since a mortgage is a large debt and a high interest rate can make your home loan quite expensive, you may not want to borrow to purchase a property until you’ve done as much as possible to improve your credit score.
If your score is pretty good right now, or if you’re working on boosting it and expect it to be above 700 by the end of the year, then 2022 may be the right time to buy a home.
2. Your job is stable and you have plenty of income
If you’re aiming to get a mortgage, most lenders want to make sure your total debt payments (including new mortgage costs) will not exceed 36% of your income. And not all your income necessarily counts.
If you’ve job hopped a lot and haven’t been with your company and earning your current salary for a few years, you may not get credit for any or all of what you earn since lenders won’t find the income reliable.
While it’s possible to get some loans with a higher debt-to-income ratio, you’ll have a narrower choice of lenders and loans may be costlier. Of course, an unstable job can also put you at risk of being foreclosed on, as well as getting a loan that’s more expensive than it should be.
If you have a steady job with reliable income, and …….