First home buyer: Do you have the financial resources to buy a house?

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There are three key questions you should ask yourself when you’re a first time home buyer”

1. “Do I have a steady job and reliable income?”
2. “Is my credit history reasonable?”
3. “Do I have money saved up for more than just my down payment?”

If you can answer all three questions with “yes,” it may be time to consider homeownership.

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“Do I have a steady job and reliable income?”

Before you choose to buy a home, you’ll want to be reasonably certain that you can make its monthly payment.

You can’t know for Certain that your job or income won’t change — life happens, after all — but an objective analysis will go a long way.

For example, if you’re planning to leave your full-time job in favor of self-employment, be aware that such a switch may be trickier than it appears.

Related: First Time borrower? These are the guidelines

There are risks in becoming self-employed. Mortgage lenders will require that you have at least one year of income before they approve you for a new job.

Many new businesses fail just like new restaurants.

Also, be aware of the fact that you will lose your guaranteed income if this role is taken on.

Sometimes, attorneys who become partners in their firms overlook this point. While your annual income may increase in this new role, your guaranteed salary will not.

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“Is my credit history reasonable?”

You don’t need perfect credit to purchase a home. In fact, you don’t even need Great credit.

A lender can approve you for a mortgage, even if your credit history includes foreclosures, bankruptcy, or short sales. But, you must have a good credit history.

Don’t forget about the past. The past five to ten years back is history.

What matters is how you’re managing your credit Today.

Related: What are mortgage points and should I get them?

If in the last six-to-12 months, you’ve kept credit card balances well below their limits, paid your creditors on time, and not added new accounts, you’re managing your credit well. This period should see a rise in your FICO (credit scores).

It’s your most recent credit history that affects your credit score the most. Bad behavior can lower your score, while good behavior will increase it.

Be aware of the amount of debt you already have before you purchase a home. Overloaded homeowners can make homeownership a difficult experience.

“Am I prepared for homeownership?”

When you’re thinking of buying a home, it’s important to think about your down payment — even if your plan is to use 100 percent financing.

This is because thinking about a down payment forces you to think about your savings and, as a homeowner, you’re going to need your savings.

It’s often overlooked that the cost of homeownership ranges higher than just your monthly payment. There are real estate taxes to pay, homeowners insurance bills to cover and, like with the homes you’ve rented in your life, things break.

Related: How much Mortgage downpayment is required? Calculate your new home today

Homes can be expensive to maintain — even the new ones.

As a homeowner, you should plan to set aside 1.5 percent of your home’s value each year to cover the costs of maintenance and repairs. Some years, you will just a portion of what you’ve earmarked. Other years, you’ll use all of it.

You should also make sure that your household savings accounts hold at least six months’ worth of living expenses, and preferably, twelve. Your household income can be affected by illness or job loss, which could affect your ability to pay your home.

It’s important that you’ve set aside savings.

Did you decide that you’re ready?

The highest home values in the last decade are expected to rise. Today is a good day to be a homeowner because interest rates are at historic lows.

Verify your current refinance rates.

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