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Q: How do I know if I’m ready to buy my first house?

A: Many people think they should time the purchase of their first home based on what’s happening in the housing market.

But first-time homebuyers are better off basing the decision on their personal lifestyle and financial situation.

You can’t predict what will happen to home prices in your neighborhood in the next few months, let alone the next few years.

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But if a long-term commitment to homeownership is one of your goals, it is important to approach the decision of when to buy in the same way you would look at any business decision.

If you don’t already have a household budget, start one now. As a homeowner, you are responsible for maintenance, repairs and other expenses that you didn’t need to worry about as a renter.

Knowing where your money goes each month, as well as how much you need to set aside for utilities, water services, insurance, property taxes and maintenance costs, will help you decide how much home you can afford to buy.

Do some research on the selling prices of homes in your area, and how much to expect as your mortgage payment.

Then factor in property taxes; homeowners’ association fees; potentially higher commuting costs if you are looking at a neighborhood further from work; and utility, maintenance and upkeep costs.

Before you buy, you need to have a reliable source of ongoing income and an emergency savings fund. Ideally, you should have enough cash on hand to cover three to six months of your living expenses.

Lenders look carefully at your debt-to-income ratio, and they like to see total debt payments — including your mortgage, credit cards, and student and auto loans — at or below 38 percent of your total income.

Try to pay down outstanding debt as much as possible before you begin shopping for a home loan. Along with your debt ratio, it’s important to have a good credit history that shows regular payments on credit cards or student debt. You can check your credit history free once a year from each of the three main credit bureaus at

You will also need a sizable down payment. The prevailing wisdom is 20 percent of the price of the home.

On a home that sells for $250,000, for example, you would need a down payment of $50,000.

There are ways to get around such a steep down payment, including zero or lowdown loans, but be aware that those options come at a cost.

You might have to pay extra for private mortgage insurance, or take out a piggyback loan with a much higher interest rate. Additionally, you’ll want to factor in closing costs, which are typically 3 to 6 percent of the purchase price.

Don’t forget to factor in moving costs. And be sure you are ready to stay put for three to five years. On average, that’s how long you have to keep a house in order to recoup your buying and selling costs.

HomeWork is the weekly column by the Master Builders Association of King and Snohomish Counties’ Remodelers Council about home care, repair and improvements. If you have questions about home improvement, send them to

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