August 10, 2022

How To Know If You Are Ready To Buy A House?

How To Know If You Are Ready To Buy A House

Once you find the house of your dreams, you still might wonder if you should buy or rent this house. Don’t make this decision hastily and think deep and hard. Buying a house is an expensive investment and you can’t rush into such a decision. Buying a house has become very popular in Bahrain, especially in recent years. This being the case, when almost everyone finds a suitable house for themselves, they try to buy it immediately. Should you buy a house because it’s trendy and popular? Or should you only buy it when you need it and can afford it? Let’s find the answers.

Are You Ready To Buy A House?

Buying or not buying a home is a process that involves evaluating your life to determine if buying a home is an important step for you financially. You should know that there are some signs that you may be ready to own a home. Let’s check them out.

Five Year Rule

If you want to buy a house for living purposes, it is useful to follow the five year rule. For houses that are not bought for investment purposes, the fact that you plan to stay in that house for at least five years may be an ideal reason to buy that house.

Debt-Income Ratio

Lenders usually decide to lend on the basis of the debt-to-income ratio. The debt-to-income ratio is your total monthly debt to your gross monthly income. The higher this number, the harder it is to get financing. If a large portion of your income is going to pay off your pre-existing loans, you need to ask yourself whether to repay a large loan. If you’re still paying off your auto loans, student loans, and credit card debt, or if your debt-to-income ratio is over 43%, it may not be a good time to buy a home. It will make you financially happier if you stay in rent for a while.

Advance payment

The down payment is a percentage of the total price of the house that you have to pay in the first place when buying a house in installments. As a matter of fact, it is one of the biggest obstacles faced by people who want to buy a house in installments. If you are determined to buy a house in this way, you also have to know how much you can give as a down payment. The standard is to give no more than 20% of the price of the house. This is important in terms of maintaining financial control for a person with limited means and who already dedicates their monthly income to debt payments.

Emergency Savings

We know that life is full of challenges. It is difficult to predict when we will encounter high-cost payments. You need to be prepared for them, especially financially. Another important sign that you are ready to buy a home is to have enough savings for this type of emergency payment. Layoffs, high vehicle repairs, emergency medical expenses, education expenses, you need to have savings reserved for incidents. If you are financially sound in such urgent matters, this may be an ideal time to buy a home.

Home Purchase Costs

Buying a home takes more than just getting the sticker price. There are many other extra costs that most new buyers don’t consider. You need to be aware of all of these fees, which can be a huge expense. It’s good to be prepared.

When the fees such as title deed fees, real estate taxes, commissions, home insurance, dues, maintenance and renewal expenses are put on top of the house purchase fee, a lot of expenses arise. You should make sure that you can pay these fees in the short and long term.

Know what you are looking for. The decision is yours in the end. 

Bonus: How does mortgage help house owners?

With the introduction of the concept of mortgage into our lives, owning a house has started to turn into a possibility much closer than a distant dream. Promising a life where we can make the best use of our savings and look to the future with much more confidence, a mortgage shortens the distance between us and our dreams.

If you ask people about their goals in life, having a house of their own will appear on many responses. From the past to the present, from the moment they started their working life, the focus of people’s savings has always been to own a house. One of the most important reasons for this is that we see owning a house as “guaranteeing” the future, beyond a traditional need for shelter.

In the past, buying a house was a much more difficult and time-consuming process financially. While people were trying to maintain their standard of living, they had to make concessions on many things for a house they could save years later. Moreover, since rent was also paid at the same time, it became very difficult to make qualified savings. Fortunately, owning a home is no longer such a painful process. Thanks to the mortgage system, you don’t have to wait any longer to get your dream home. Now, let’s look at some reasons why you should go for a mortgage.

The pleasure of owning your home

When you look at flats for rent in Bahrain and become a tenant, you inevitably have to rein in many of your dreams. Regardless of your possibilities, it is often not possible to find a house that meets your expectations. If the house you live in does not belong to you, many radical changes you would like to make in your living spaces remain only as a wish. 

Finding the opportunity to freely realize all your dreams about your home, adding something of yourself to it, feeling that you belong to the place where you live is perhaps one of the greatest pleasures you can experience. Moreover, you can live a life in peace, free from the endless burdens of being a “tenant”. Your only criterion in every decision you make about your home: Your pleasure.

End the ordeal of moving

When we move from a house, we leave our memories behind. Our child’s first step, pleasant family dinners, our neighbors, the street we are used to walking on every day, sharing, many memories, good and bad. A house of your own is the guarantee of peaceful and beautiful days that you dream of sharing with your loved ones for many years.

On the other hand, the fatigue and financial burden of moving a house can make people tired even at the stage of thinking. Endless bureaucracies, getting things ready to move, redecorating a house and the fatigue all these bring. When you look at it like this, you will see that the house you will buy with a mortgage is actually much more than a house.

One of the best ways to evaluate your savings

Of course, getting rid of these burdens or getting the comfort you dream of may not be enough to make the mortgage attractive for you.

The money you earn by sacrificing your sleep, comfort, and sometimes the time you will spare for your loved ones is a phenomenon that is valued in proportion to the effort spent. You show all this effort to have a better life and to prepare a better future for your loved ones. Therefore, this situation brings with it the anxiety of making the best use of the savings you have made by thinking about your future. A house you will own, beyond being a living space that you will share with your loved ones for many years, is also among the best ways to make use of the savings you have created by making sacrifices for your future.

Don’t let your money go to waste

One of the most important expenses that are not returned from our budget every month is the rental expense. Although the fact that we have taken this situation for a moment prevents us from thinking like this, a simple calculation is actually enough to see what a great financial loss we have suffered in the process. In this sense, we can define a mortgage as a dam in front of wasted water. 

Do not be misled by the fact that the amount you will pay for the mortgage is above the average rental price. If you think that all that loss is offset by little more money wasted in the long run, you may find that a mortgage is one of the best ways to secure your efforts.

Investment tool

Mortgage, as an investment tool, has the feature of being an option with an extremely high return in the long run. Even if your savings do not seem sufficient for a good investment, you can have a house far beyond your savings with the payments you will make according to your income and turn your savings into a profitable investment in the long run.

Visit NorthernSky to find flats for rent in Bahrain.

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