Are You Prepared to Buy a Home? Find Out Here [Checklist]

Down in New Orleans, culture is everything. You can hear it in the jazz bands, smell it in the food and see it in the architecture. If you dream of owning one of those fabulous NOLA homes, you may feel like jumping the gun whenever a listing pops up. Are you prepared, though? Use this checklist to gauge if you’re ready to buy a house in the Big Easy.

1. Do You Have Income?

Naturally, the first step is to ensure you have a consistent means of paying the mortgage. Even if you have a little saved up, life can get in the way, and handling monthly payments on top of medical bills or repair expenses may dry up the well fast. Whether you’re a hands-off entrepreneur or an hourly employee, a steady paycheck is a major boon.

In addition to income, it’s crucial to have emergency funds. You should have at least three months of expenses saved or as much as six months. In 2023, the hidden costs of homeownership added up to over $13,000 — a hard pill to swallow after buying a home. Saving up ahead of time provides a cushion to fall back on and reduces your potential regret of moving too fast.

2. Do You Have Debt?

A better question is, “Do you have manageable debt?” It’s still possible to buy a home when you have debt, but it’s an expense you must account for as much as other bills.

One way to gauge if you have an appropriate amount of debt is with the debt-to-income (DTI) ratio. Start by adding up your monthly payments, including what your mortgage would be. Then, divide that number by how much you make in a month before taxes and other obligations. Lenders like to see a DTI ratio of 36%-43%, and they prefer that less than 28% of that goes toward your new space.

3. Do You Know What You Can Afford?

Now that you’ve taken inventory of your financial situation, you need to identify a house you can afford. Here are the factors you should consider when calculating how big a home you can buy:

• The property’s price
• The down payment
• The interest rate
• Your loan term
• Your annual gross income and monthly expenses
• State taxes
• Additional fees, such as homeowners’ association or condo fees

You could do all the calculations yourself, but luckily, there are a host of free home affordability calculators on the internet. To give yourself a starting place, consider 28% of your total monthly earnings to gauge the mortgage you can afford.

4. Will You Live There for a While?

Buying a home in New Orleans makes little sense if you only stay there for a year. One of the best clues of your preparedness to buy a house is if you’re ready to put down roots. Is where you’re staying where you can see yourself in five or 10 years?

Only 10% of homes owned for under a year have worthwhile equity. Your equity increases as you stay in a house, pay off your debt and make improvements. It starts to be worth more while how much you owe decreases, so you can earn a decent bit of change when you are finally ready to sell.

5. Do You Know Which Professionals to Work With?

Working with professionals who can guide you through the process is the key to buying a house the easiest way possible. You can go into the process independently, but there will likely be mountains of paperwork or questionable electrical work you may miss.

Before buying, you need a real estate agent, a home inspector and an appraiser. The agent will help you negotiate and understand the market you’re trying to buy in. Meanwhile, an inspector will ensure there’s nothing wrong with the property or point out potential issues that could lower the price. The appraiser can do the same, ensuring you’re not paying back a bigger loan than necessary.

6. Are You in the Right Headspace?

Buying a house can be stressful. Nearly one-quarter of homebuyers said therapy sessions were necessary to make it through the process, and 77% of those with partners said they bickered during it. You should be ready to buy and using professionals along the way will help make the process smoother, manageable and about as stress-free as it can be. Still, being ready to look is a requirement.

Many factors add up to a better homebuying mindset. Do you know your must-haves, wants and compromises? Do you really like the place you’re living in? Do you have resources and support when things feel too challenging? A self-check-in on whether you can handle the stress right now helps greatly in the months ahead.

Get Ready for Homeownership With Your Preparedness Checklist

New Orleans may be known as The Big Easy, but buying a home here shouldn’t be taken lightly! The process requires preparation, including your finances and mental health. Get ready to start browsing the many gorgeous NOLA listings after ticking off each box on this handy checklist.