How Do You Know When You’re Ready To Buy A Home?

Image Source: Pexels

Owning your home is one of the biggest adventures of your life. It creates a unique sense of pride and ownership. It also gives you a canvas to imprint your tastes, interests, and lifestyle on.

However, owning a home has proven particularly challenging for many individuals in recent decades. A variety of economic and lifestyle factors have held many back from being able to indulge in the financially exhausting activity of homeownership.

If you’re trying to decide if you’re officially ready to take on your own home, you’re not alone. Here are some of the biggest questions worth asking as you sort through whether or not you’re ready to buy a house.

Are You Financially Prepared?

Houses are often trumpeted as sound economic investments. They help you build up equity and avoid the need to throw away money on paying rent to a landlord.

While this is true, though, it’s equally true that houses are expensive. Very expensive. When you own your own home you have to pay for a variety of things, including:

  • The mortgage;
  • Home insurance;
  • Property taxes;
  • Utilities;
  • Maintenance and repair costs;
  • Home improvements and renovations;
  • Landscaping;

The list goes on and on.

On top of that, you’ll need a good chunk of change to buy the house itself. From realtor fees to taxes, down payments, moving costs, and more, there are plenty of ways to spend your hard-earned cash while buying a house.

The first question that you have to answer, then, is if you can afford a house in the first place. Do you have a solid and consistent income to pay a monthly mortgage? Can you save up extra money for repairs and unexpected homeownership expenses?

If you find that you’re considering wiping out your savings or emptying your nest egg early, you may want to think twice about your financial preparedness. Instead of moving now, consider protecting your retirement and rainy day funds and begin saving money specifically for a house.

However, if you have a decent amount of money set aside to offset up-front expenses and a steady stream of income to boot, you may be ready to leap.

Do You Have Other Expenses Looming?

Even if you have a sound financial footing under you, that doesn’t automatically equate to being ready to buy a home. While your present financial situation may be solid, it’s worth asking yourself if it will remain that way.

For instance, do you have any major expenses coming up? Are you fresh out of college and about to start paying for school loans? Do you have a wedding or birth on the calendar? The major expenses associated with these activities can put unnecessary pressure on your life if you also toss the added expense of a home into the mix.

Is Your Career Ready for Homeownership?

For many, the topic of their career as a whole — not just the money that it generates — often doesn’t factor into the idea of owning a home. However, it’s often recommended that you plan on owning your home for at least three to five years before you move again if you want it to be financially worth the work.

This naturally leads to the follow-up question: is your career going to be stable for the next three to five years or so?

Another question to ask is if you’re considering pursuing a change in your career at any point soon. If that’s the case, can you look for a job in a good housing market with low prices that will appreciate in the future? You may even be able to find an employer with a good job relocation package that helps you offset some of the costs of buying a house and moving into your new residence.

Are You at the Right Time of Life to Take the Plunge?

Another concern is if you’re at the right time of life to buy a home. Have you recently graduated from college and decided it’s time to buy a home? There are a number of factors to consider before signing on the dotted line.

For instance, are you thinking of getting married? If you already are, do you plan on having kids soon? If you’re on the younger side of things, has your credit had enough time to build up to a good credit score?

From family dynamics to jumping the gun on your credit, your age and stage of life are both important factors when it comes to getting a good deal on your home.

Figuring Out if Now is the Time to Buy a Home

Owning your own home isn’t formulaic. It can’t be. Everyone’s situation is uniquely different from one another. However, many common factors can most certainly help you judge how ready you really are to buy a home.

Things like financial security, a lack of major future expenses, having a stable career, and even simply being in the right time of life all factor into the mix. If you want to make the right decision, you must ask yourself the tough questions. Only then can you move into your homeownership journey with confidence.

Buying A House VS Renting It – Which One Is More Profitable?

There’s a widely held belief that buying a home is preferable to renting. You’ve probably heard your parents or even friends say that as long as you are renting, you just throw the money away, into a landlord’s pockets. Contrary to this popular belief, fewer and fewer Americans decide to own a house, claiming it is a liability at best, and a problem at worst.

Which one then is a better, safer, and more profitable option? This article examines the benefits of both buying and renting and tries to determine the answer to this question.

Benefits of Buying

You can Make Money from your Home

When you own your home, you can make money from it in a variety of ways. Renting out a room or even just car parking space could deliver a steady stream of income.

And if you have the right kind of mortgage, you can rent your house out whilst living somewhere else. Check out this rental property calculator to find out how much you’d stand to make.

House Value May Increase

When you buy a home, particularly if you have a considerable deposit, you can look at it as an investment. As long as you’re not planning to move any time soon, chances are its value will increase by the time you come to sell.

This, of course, depends upon the area in which you buy and the general economic climate. But if you sell your home 20 or 30 years down the line, you probably stand to make a profit.

Making Home Improvements Usually Reaps Rewards

When it comes to putting your home back on the market, you could find that improvements you’ve made to the property have increased your home’s value.

Often, well-executed home improvements pay for themselves and then some at the time of a sale.

Benefits of Renting

No Additional Costs

People like to say that renting a property is just like throwing money away. But whilst buying a home can be an investment, there are plenty of other costs involved.

If you buy a home with a mortgage, you’re spending a huge amount of money on interest payments over the course of that mortgage.

And that’s before you even get started on maintenance costs, insurance, the fees associated with buying and your utilities. By renting you avoid all of these additional costs.

The Current Economic Climate is Less Relevant

The economic climate has much less impact on your rental than it would on a bought home. Whilst rental prices may rise and fall, chances are they generally stay in line with wage patterns.

However, buy a home with a large mortgage and you’re more susceptible to changes in the economy and the housing market. 23% of Americans owe more on their mortgages than their home is actually worth.

This is called negative equity and unless house prices increase dramatically or these people hold on to their homes for a long time, they’ll struggle to sell their homes any kind of profit.

You Won’t Be Stuck Paying a Rate you Can’t Afford

Sometimes landlords choose to raise the rent. If this happens and you can’t afford the new figure, you have the opportunity to give your notice, pack up and find somewhere new.

When you have a mortgage, payments can rise with interest rates. But if your mortgage suddenly becomes unaffordable, you don’t have the same flexibility to reduce costs. You may end up having to organise a costly move to downsize or even lose your home if you fail to make mortgage payments.

Renting Frees Up Money for Other Investments

You may find that renting is actually a cheaper option for the moment. But that doesn’t mean you can’t invest in your future. The money you save renting rather than buying can be used to make investments in areas other than property.

Time to Ask Yourself Some Questions

Whether you choose to rent or buy will depend largely on your current circumstances. Ask yourself a few questions.

  • Do you like the flexibility of renting? Or would you like to settle down in one place to raise a family?
  • Do you have a big enough deposit to buy a home? And are current interest rates favourable?
  • How much are monthly rental costs? How do they compare to the costs of buying a home, maintaining it and paying a mortgage?

Predicting how much profit you stand to make from buying a home is impossible. It’s always something of a gamble. What you can do is work out the current affordability of both renting and buying and decide which option fits best with your life.

 

Sienna’s bio:

Sienna Walker is a self-growth and lifelong-learning enthusiast who enjoys seeking out new and unique ways of saving and earning money. She is also an active blogger and might often be found online, sharing her tips with others and participating in online discussions.