Everyone touts the benefits of homeownership and, for the most part, homeownership is a wise, financial choice for most people. However, there are times and occasions when homeownership may not be the best decision, and renting may make more sense.
If you've been considering one of the many homes for sale in Atlanta but are not sure if you're in a position to buy, the following list will help you decide if you may want to put owning a home on the back burner:
1. No Cash in the Bank – Just a few years ago banks were offering plenty of attractive home loan programs; many of which required little to no down payments. Today, however, is a much different story, as banks are much more particular regarding to whom they will lend money. In particular, a lender will view you as less of a credit risk if you have at least 20 percent for a down payment. Of course there are loan programs that require less of a down payment but, in general, if you want to get the best rates it is best to come to the table with no less than 20 percent.
2. A High Debt-to-Income Ratio - You may pride yourself on paying all of your bills on time each and every month, but a bank will look further into the situation. In particular, one of the criteria lenders use when determining your eligibility for a home loan is your debt-to-income ratio, or the amount of debt you have in relation to your income. Although this ratio will differ from lender to lender, it is always best to pay down the better part of your debt load before applying for a home loan.
3. An Unstable Job – Unless you are comfortable in your current position and see yourself employed in the foreseeable future, it just doesn’t make sense to own a home. In particular, individuals who do not see themselves working in an area or at a company for an extended period of time will just not benefit from owning a home short term. In fact, it is quite possible that they could lose money on the deal.
4. A Less-than-Perfect Credit Score – If you have a less-than-stellar credit past, it pays to first clean up your credit and improve your credit score before applying for a home loan. The ideal FICO score, by many lenders’ standards, is over 700. Order a copy of your credit report and check out your current FICO score before deciding whether applying for a home loan is right for you.