Finance expert Suze Orman is a big believer in homeownership, however, as is her signature style, she wants to make sure that people go into this enormous purchase with some key things underway first.
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By following Orman’s advice, potential homebuyers will be more likely to do so in a safe, secure way that doesn’t threaten their future financial stability.
Here are the three key things you need lined up before buying a home.
A Robust Down Payment
While the “gold standard” of down payment advice is generally to put 20% down on a home, for many people that can be a hefty sum to arrange, Orman acknowledged. However, she wrote in a blog post that she’s not a fan of low down payments, either.
“At a bare minimum I want you to make a down payment of at least 10%,” she wrote. That might mean you have to either look for a more affordable home or a more affordable area but 10% allows for a much more reasonable mortgage.
She did recommend looking into programs that help first time homebuyers, such as FHA-insured mortgage programs, which allow you to buy a home with only 3.5% down, though with fees and other costs, you will end up paying more like 5%.
She also delivered some blunt advice, that if your credit score is not good enough to qualify you for a conventional mortgage, you shouldn’t be buying a house yet.
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A Secure Job With Reliable Wages
While it probably seems like it goes without saying that you need a secure job with reliable (and high enough) wages before you buy a home, Orman has a suggestion for how to practice seeing what it’s like paying a mortgage before you do.
On a recent Women and Money Podcast, she told a caller to take $2,000 at the beginning of each month and put it into a money market account that pays interest.
First, this allows you to see if you can part with that much money, which is actually lower than many mortgages. If putting that much money away works for you, then do it for six months, and you’ll not only build up savings and interest that you could use for a down payment, but you’re likely ready to buy a home if the other steps have been met.
“… if you can, and it’s easy … and you know that your job is stable, you know that your income will remain for a long time, then yeah, you can afford to buy a home,” Orman said.
You Can Afford These Other Costs of Homeownership
Home ownership isn’t a one and done cost. In addition to your monthly mortgage payments, you have homeowners’ insurance, property taxes and maintenance. If you know that you can not only afford those things now, but possible increases (particularly for insurance and taxes), and you have a solid emergency fund, then she said you’re a strong candidate to buy a home.
Orman’s advice may not be ground breaking, but it’s reliable and will help you start your foundation as a homeowner on the most solid ground.
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This article originally appeared on GOBankingRates.com: Planning To Buy a House in 2025? Suze Orman Says You Need 3 Things Lined Up First
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