Buying a home is one of the most major financial decisions you’ll make in your lifetime. It’s very likely that you’ll have to think long and hard about whether or not you are well-prepared to make this kind of financial commitment. Given that it will be among your most expensive purchases, here are things you want to make sure you consider to help you make a sound decision:
Home ownership is the ultimate realization of the American Dream. However, you cannot run the risk of falling in love with a home you cannot afford. You’ll need enough money to cover a down payment, monthly costs, repairs or maintenance and should have some left for your savings and emergency fund. It is easy to fall for a home that lies beyond your price limits but first find out how much home you can manage to pay for. By calculating what you can afford to spend on a house, it can help you avoid both financial and personal stress.
Signs you will need to reconsider buying a house:
- You can’t meet the downpayment – Ideally, you’ll need to put at least 20% down. Anything lower than that and you will be required to pay for a private mortgage insurance or PMI. This is to protect the lender in case you stop or fail to make payments on your loan.
- You don’t have enough savings – We all experience unexpected financial setbacks at some point in our lives. A family getting sick, a lost job or a denied medical claim. However, the bank still expects to receive our monthly mortgage payments. If you don’t have an emergency fund and do own a house, chances are you will someday find yourself in financial turmoil.
- You are not staying longer than five years – Home ownership works best as a long-term approach. It takes at least five years to have a reasonable chance of breaking even on your housing purchase.
Every homebuyer has vastly different wants and needs. Identify them at the beginning of your home search so your real estate agent can show you homes that will match your needs, budget and even a few of your wants.
- Determine how much space you’ll need in a home – Not only should you factor in your current family size, but also the size of your future family. If you and your partner are considering starting a family while in the home, or are having your children move out, make sure to purchase a place that has the right amount of space for you.
- Think about how many bedrooms you need – Look at the number of people currently in your family. If you have a family of four, with two children, you will probably require somewhere between 3 and 4 bedrooms. Do you often host family members or friends at your home for various lengths of time? In order for them to have a nice visit and remain comfortable, it might be wise to dedicate a specific area of the house exclusively for guests.
- Storage space – Most homeowners can never have enough storage and there seems to be a endless struggle between how much belongings you own and how much space is available in your home.
- What type of home is perfect for you – Are you drawn to the more traditional homes? Or do you prefer the more unique or modern houses?
When you buy a home in a good location, it’s usually a solid long-term investment. It is the location that will most impact your everyday life and your home’s future value. How convenient is the house you are buying to your style of living? Assess the location of the property you are buying through any of these:
- Safe Neighborhood – When you choose a place to live, safety should be at the top of your priority list.
- Good Schools – Homes located in the district for good schools holds a better market value when it comes time to resell.
- Convenient access to shopping, dining and other popular places
- Transportation – should have close proximity to public transportation, tram, metro, and bus.
There are plenty of good reasons to own the roof over your head. If you have determined your capability to buy a house, after taking all of these considerations into account, then you are ready to buy.