It’s natural to dream of a bigger house with more rooms to accommodate your visiting relatives and a more extensive backyard where your furry friend can freely move around and play. Whether you’re simply upgrading your lifestyle or making room for an additional family member, you have all the valid reasons to crave a larger space. But are you financially ready to move into a grander abode?
Before you shop around for Utah home loans, take a moment to reflect on your finances. The following telltale signs prove that you’re making the right decision:
You’re Mentally Prepared for the Big Move
Moving into a bigger property entails bigger responsibilities. With a roomier space comes more room for heftier utility bills, higher property taxes, and more expensive maintenance and repair expenses. You’ll also buy furniture and appliances for additional rooms and spaces. Before you take the plunge, check if you’re mentally ready for the hurdles that might come down the road. With more money-related burdens placed on your shoulder, you must learn to put yourself back up instead of letting the challenges consume you.
You Can Stick to Your Monthly Budget
The ability to stick a monthly budget is a good indication that you’re ready to upgrade your property. This big life decision comes with unexpected expenses, so you must learn to turn down those unplanned invites from your friends and resist the book a spontaneous vacation when things get stressful at work. Otherwise, you could fall into a mountain of debt and set yourself up for a financial disaster.
You Have Enough Savings
Having savings fun is a necessity wherever you are in life. Your savings must be separate from your funds for the new home, including the down payment, deposits, renter’s fee, insurance, and more. According to experts, your savings should be 10% of your disposable income. Of course, you must aim for a number higher than that.
You Have Saved Up for Emergencies
Most home loans today require a 3.5% down payment. If you can put down at least 20% on your new home, you can enjoy the best mortgage terms and interest rates around. If you fall short of that number, the best thing to do is to save up. Or, you can use money from your emergency funds. In this case, make sure that you still have enough money left to cover unexpected expenses, such as a job loss or pay cut. Typically, you should save three to six months of your total monthly payments in your emergency funds.
You’re Properly Insured
Buying a new property means you need to purchase new insurance plans to cover your new asset. This ensures that you won’t pass the burden of paying for the mortgage to your loved ones in case something terrible happens to you.
Your Credit Score Is Good
One of the most significant factors that lenders consider is the credit score of the borrower. Make it a habit to check your credit and compare your ratings to ensure that your record is flawless. Remember that you need at least 740 to achieve a “very good” rating and 800 to get that “exceptional” status.
You’re Practically Debt-free
Lastly, it helps to ensure that your debt-to-income ratio is lower than 43%. Otherwise, make sure to pay off your debts first before you consider looking for home loans in Utah.
Buying a bigger home is a decision that should not be taken lightly. If you’ve considered all the factors above, then congratulations! Contact a reliable mortgage broker to discuss your plans.