#12: How do I know if i'm ready to buy a home?
As a first time homebuyer, you may have asked yourself, “how do I know if i’m ready to buy a home?” If so, please know that you are not alone! A big driving force behind this is mortgage interest rates (which are still historically low, but high compared to the 2% rates we were seeing last year) and heavy competition on the market. Homes are being sold over asking, buyers are waving inspections, and the best homes are getting under contract in days! So it’s perfectly normal to feel overwhelmed but I am here to remind you that there is still one free tool that can help you determine if buying your first home should be a priority – and that is by calculating your debt to income (DTI) ratio.
Now if you are already deep into the homebuying journey, then you are likely familiar with this. But if not, DTI ratio simply serves as a guide that lenders use to determine how comfortable (financially) they are providing you with a loan. This is determined by looking at your monthly expenses and gross income and assigning you a percentage that will help them determine where on the scale you fall (from good to needs work).
Watch this video to learn more about how to calculate your debt to income ratio and use this as a guide to determine if you’re ready to buy your first house soon. Also, keep watching for tips on how I improved my debt to income ratio so that I could purchase my first home with confidence!
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