So you’ve decided to make the jump. Maybe you want to be able to paint the walls any color you’d like (we hear Ultra Violet is in for next year) or have a backyard for your dog to play in or are just tired of having the expense of rent instead of the investment of homeownership. We hear you, and you’re right, homeownership comes with many advantages. Before you start picking patterns for curtains, you’ve got a few other things to work out. Here’s what you need to ask yourself to decide if you’re ready to buy a home.
1. What’s your money situation?
More than likely you’re going to need a loan to buy your home, especially if this is your first home purchase. In this case, the first step is to talk with a mortgage lender to find out exactly what you are approved for. They’ll talk with you and find out what your current assets and debts are, ask about your income, check your credit score, and basically assess the situation to help you figure out where you’re at. Once you know the general math, you’ll be able to start looking for a home. One thing to consider, though, is that home prices are not all-inclusive. If you buy a home for $150,000, that’s not the only price you’re liable to pay right away. You’ll be expected to pay homeowners insurance, closing costs (averaging $3,000-$7,500), and sometimes Homeowners Association fees all right away as well. All this needs to be factored into your math when purchasing your home.
2. What does your future hold?
While no one can predict the future, you should have a fairly accurate guess of what the next few months, and ideally years, hold for you. While nothing is ever certain and there are exceptions to the rule, shortly after closing on a new home is not the time to quit your steady job in favor of becoming a freelance harmonica tuner (no matter what the couples House Hunters make you think). You’re also going to want to make sure your new home is in an area you’d like to stay in. Are you planning to stay put for a while or are you thinking of leaving the country to teach in a foreign land? If you have children or intend to, how are the schools in the area? Will you have enough bedrooms? Does the neighborhood seem safe? Sure, if you find that you don’t want to or can’t live in your house after a few months or years, you do have the option to sell or rent it out, but both of those options come with their own challenges and are not alternatives to be taken lightly.
3. Are you being realistic?
Sure, you want to find your dream home in a wonderful location priced below your budget, but that rarely happens. More often you’re going to have to make some concessions when it comes to finding the right home. Is having a detached garage a real deal breaker for you or can you overlook that fact for a spacious kitchen? Do you have your heart set on a charming old Victorian home, but cringe at the thought of having to make significant updates right off the bat (and could you afford to do so?) Will you be able to afford the utility costs of heating/cooling/lighting a 7300 square foot home or would you be better suited for a smaller place? Do you really want to move you, your spouse, and 3 Great Danes into a “tiny home”? These are all things that need to be considered. You’re better off by recognizing these trade-offs in the beginning and addressing them than to ignore the reality of your situation.
Owning a home is an investment, but choosing the right one and making sure you’re ready, both financially and otherwise, are the biggest factors in making the decision successful. Long story short, you should buy because you’re ready, not because you think you need to.
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