Home Purchase Readiness Assessment:

Are you thinking about buying a home but feel like something’s holding you back? This assessment will help you identify common barriers that may be preventing you from taking the leap. Answer the following questions honestly to get a clearer picture of where you stand and what steps you might need to take to make homeownership a reality.

1. Financial Readiness

Question: Do you have a consistent savings plan and emergency fund in place?

• A: Yes, I save regularly, and I have an emergency fund with at least 3-6 months of expenses.

• B: I save occasionally, but I don’t have an emergency fund.

• C: I struggle to save and don’t have an emergency fund.

Reflection: Financial readiness is one of the most common challenges for first-time homebuyers. If you’re answering B or C, consider setting up a savings plan specifically for your home purchase and building an emergency fund to cover unexpected expenses once you own a home.

2. Credit Score and Credit History

Question: How would you rate your credit score and credit history?

• A: My credit score is above 700, and I have a strong credit history.

• B: My credit score is between 600-700, and my credit history is fair.

• C: My credit score is below 600, or I have little to no credit history.

Reflection: A good credit score opens up more financing options and can lower your interest rate. If you’re in the B or C range, consider ways to improve your score, like paying down debt or establishing a credit-building strategy.

3. Debt-to-Income Ratio

Question: Are you currently managing high levels of debt compared to your income?

• A: My debt-to-income (DTI) ratio is below 36%, and I manage my debt well.

• B: My DTI is between 36%-43%, and I’m working to pay down my debt.

• C: My DTI is above 43%, and I’m struggling to pay down debt.

Reflection: Lenders often look for a DTI ratio below 36% for conventional loans. If your DTI ratio is in the B or C range, focus on reducing your debt to improve your eligibility and loan options.

4. Job Stability and Income Consistency

Question: How would you describe your job stability and income consistency?

• A: I have stable employment with consistent income and a clear career path.

• B: I’m employed but have occasional income fluctuations.

• C: My income is irregular, or I am currently looking for a stable position.

Reflection: Lenders prefer borrowers with a steady income, as it reduces the risk of missed mortgage payments. If you answered B or C, you might want to work toward stabilizing your income or securing a more consistent position before purchasing a home.

5. Knowledge of Homeownership Costs

Question: Are you aware of all the costs associated with buying and maintaining a home?

• A: Yes, I’ve researched the purchase, closing, and maintenance costs, and I feel prepared.

• B: I have a basic understanding, but I’m not sure about all the hidden costs.

• C: I haven’t looked into the specific costs of homeownership yet.

Reflection: Homeownership involves more than just a monthly mortgage payment; there are closing costs, property taxes, and maintenance expenses to consider. If you answered B or C, start researching these additional costs to ensure you’re financially prepared for homeownership.

Summary:

Count your responses for each letter and see where you may need to focus:

• Mostly A’s: You’re likely ready to move forward with purchasing a home!

• Mostly B’s: You’re on the right track but may benefit from additional preparation in specific areas.

• Mostly C’s: You may want to address some foundational areas before pursuing homeownership.

Next Steps:

Depending on your results, consider setting financial goals, improving your credit, reducing debt, or speaking with a real estate professional to help you get on the path to homeownership.