If you’ve been watching real estate news, you know that many experts say it’s a great time to buy a house. Housing prices have fallen 34% from their 2006 peak rates. Mortgage rates are impressively low, too. Still, a great time for home-buying in general is not necessarily the best time for you—especially if you’re a first-time home buyer. How will you know when you’re ready to buy your first home? You have to decide for yourself, based on the details of your own unique financial situation. Here are some questions to ask yourself to determine whether now (or soon) is the best time for you to become a first-time buyer:

What is your 10-year plan?

Some experts say you should plan to live in your new home for at least 3 to 5 years. Others recommend that you stay for at least 10 years. In either case, it’s good to know what you’d like to do with your life, and where, for about 10 years into the future. It’s okay if you’re not ready to make a long-term commitment to one home in one neighborhood and one city, but if you’re not, it’s probably not the right time for you to buy a house.

Are you ready to be your own landlord?

The best thing about owning a home is that all of the decisions are yours: decorating, landscaping, how and when to make improvements, and so on. The worst thing about owning a home is that all of the responsibilities are yours. You’ll be doing all of the maintenance, and when something needs fixing, you’ll have to make the arrangements and pay the bills. Some people prefer having a landlord to call. Do you want to live the homeowner’s lifestyle?

How steady is your income?

It’s tough to get a mortgage without a provable, very steady source of income. More important, steady income makes it easier for you to save up a down payment and a financial cushion that will help you pay your mortgage if you fall on hard times in the future. Lenders prefer proof of a steady job, but self-employed home buyers can get mortgages. They just have to jump through more hoops to prove their income is real and dependable.

What debts do you already have?

Lenders will look at your debt-to-income ratio, and with good reason: They want to know you’ll be able to pay your mortgage every month. How sure are you? If you have credit card bills, car loans, or other debts, it helps to take the time to pay some of them off before you buy a house. You’ll end up with a better mortgage rate and a less stressful financial life.

How is your credit?

A credit score of 720 to 740 will get you the lowest mortgage rates. You can get a mortgage with less stellar credit, but a lower score will cost you a lot of money over the life of your mortgage. If your credit is less than perfect, you may choose to spend a year or more cleaning up your credit before buying a home. If you’re young and just starting out, your problem may be no credit, rather than bad credit. If this is you, Kiplinger’s guide to establishing credit will help you get off to a good start. Spend a couple of years building up your credit history before you buy your first home.

What do you have saved for a down payment and initial costs?

You probably already know that you’ll need a down payment—5% at least, though at least 20% is best. Be sure to factor in closing costs, too, when you figure out how much you’ll need to pay upfront.

The Staff at San Juan Realty, Inc.