At some point as you’re writing out your rent check, you get to the point where you look at the amount and think to yourself – at this rate, I could BUY a house. If you’re fed up with paying rent every month that’s high enough to finance a mortgage, it may be time to take a serious look at what it would take for you to get a mortgage loan and buy a home of your own.

How do you know if it’s time to stop renting and time to start investing your monthly payment in a house of your own?

1. Are you planning to stay put in the area?

The first question to ask yourself is how long you are planning to stay in your new home. If the answer is ‘less than two years’, then it may be to your advantage to continue renting for a while longer – and use the time to build up your credit more strongly.

If, on the other hand, you’re planning to stay in one residence for more than a few years, buying makes more sense. Owning a home puts down roots, and makes you a more stable member of the community. It also makes more financial sense to buy if you’re going to hold onto the property for more than two years. Unless you ‘flip’ properties – buy cheap, make repairs and sell high. It’s nearly impossible to recover your investment if you own a house for less than two years.

2. How’s your credit?

If you’ve never checked your credit score or read your credit report, this is the time to do it. The higher your credit score, the easier it will be for you to qualify for a mortgage. It will also mean the better the terms of the mortgage for which you’ll qualify.

If you find problems in your credit score, you can take steps to fix them before you apply for a mortgage. This includes erroneous information on your credit report or extenuating circumstances that may have led to a missed payment or two. In many cases, minor credit problems can be repaired with no more than a few months of on-time payments.

3. How much house can you afford?

Figuring out how much of a mortgage you can take on can seem almost like some sort of voodoo. You know how much you can afford to pay per month for a mortgage payment. But how does that translate into how much you can afford to pay for a house? The easiest way to work it out is to use an online mortgage calculator.

Many web sites that offer credit and loan information have mortgage calculators available that will work in either direction.  Plug in the asking price of a house and your expected interest rate and the amount of your down payment. The calculator will tell you an estimated monthly payment. Or plug in your income and expenses, the amount of the monthly payment you can make and the length of time you want to repay it – and the calculator will tell you the most expensive house you can comfortably buy.

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