- April 18, 2022
- Posted by General Electric Credit Union
- 5 read
The Tell-Tale Signs You’re Ready to Stop Renting
Homeownership is a goal for many people. In fact, 74% of those surveyed consider it part of the American Dream.1 If you currently rent, you may be trying to gauge whether you’re ready to take the leap and purchase property. Below are a few sure-fire signs you’re prepared to stop renting and become a first-time homebuyer.
3 indications you’re ready to say goodbye to renting
1. You have a solid credit score
You’ll likely pay more interest over the life of a loan if you don’t have a good credit score. This is because lenders may require you to pay more in closing costs. As a result, the interest rate and your monthly payments will be higher. If you already have a high credit score, this sets you up for more advantageous loan options.
But if you need to improve your score, you can do so by making on-time payments, utilizing less than 30% of your available credit, and diversifying your credit portfolio. Learn more about the factors lenders look at and how to give your score a boost in The Ultimate Beginner’s Guide to Credit, a free eBook from General Electric Credit Union (GECU) available for download online.
2. You’re out of debt (or getting there)
Having debt can negatively impact your credit score. It’s best to whittle away at this amount before seeking pre-approval so you can improve your score and gain access to more favorable loan rates. Even paying off small debts will increase your purchasing power!
The best way to tackle debt is with a plan. GECU members who are enrolled in Online Banking have free access to Money Management online or via our mobile app. This robust tool helps you budget, track goals, and visualize a debt payoff strategy. The app even offers suggestions on what to pay off first by listing all your debts in order of priority, so you know where to focus your efforts.
3. You have steady income
While a down payment, closing costs, and home inspections are all important up-front costs to consider, you also need to establish whether you can reasonably afford a mortgage payment and the costs associated with owning a home. For this reason, it’s essential to have a steady stream of income prior to house hunting. Consistent income will also give you a better idea of what you can afford, ensuring you don’t buy a property that stretches your budget too thin.
In your first year of homeownership, your furnace could go out or a tree on the property may need to be cut down. These are all items that you wouldn’t have been financially responsible for in a rental property. As a rule of thumb, it’s wise for first-time homebuyers to budget 4% of the price of a home for annual maintenance costs.2 Add this to your calculations to determine whether you’re financially comfortable moving forward with real estate purchase.
Becoming a first-time homebuyer is a big decision that shouldn’t be taken lightly. Trust the local team at GECU to help you navigate this exciting milestone. With branches in select Ohio, Indiana, and Kentucky counties, you’ll feel good knowing we’re familiar with the neighborhoods you want to buy in. Plus, we’ll break down the jargon to make sure you understand the mortgage options available to you. Schedule an in-branch appointment, contact us online, or give us a call to learn more.