For decades, we have seen buying a home as an important milestone in life and in finances. It’s one of the signs of being a “grown up.” On top of that, buying a home is often considered a major financial accomplishment.
But are you truly ready to buy a home?
Don’t just get a house because you feel like you are supposed to. Think about what it means for your finances and your life.
Financial readiness to buy a home
The first step is to consider your financial readiness to buy a home. Can your finances handle the costs of home ownership? First of all, it helps to reduce your debt. You don’t have to be completely to qualify for a mortgage and buy a home, but you also don’t want to be overwhelmed. Get rid of some of your debt before you jump into a home purchase.
Another consider is whether or not you have the income to buy a home right now. You shouldn’t spend more than 30% of your take-home pay on your mortgage costs. In some cases, experts recommend that you keep all of your housing expenses to no more than 30% of your income. This is important because you don’t want to end up house poor.
Finally, you need to be ready for other costs of homeownership. You might be surprised to discover how much it can cost to pay for maintenance and repairs, property taxes, insurance, and other related costs. Make sure your monthly budget can handle the costs of buying a home before you move forward.
Emotional readiness to buy a home
The decision to buy a home isn’t just about the money. It’s also about where you are emotionally and your lifestyle preferences. If you know you will move soon, there isn’t much reason to buy a home – unless you want to deal with the hassle of renting it out.
In some cases, you might like the flexibility that comes with renting. It’s easier to break your lease and move than it is to try to sell your home. If you have to move fast, the cost of breaking a lease is usually lower than the cost of selling at a loss in the name of getting out.
For some people, renting is preferable. The lifestyle, which includes having a landlord take care of repairs and some of the maintenance, is considered a better option than being responsible for the house. If you buy, you need to be ready to put down roots in a community, and be prepared to take care of your property (or pay someone else to take care of it).
There’s nothing wrong with putting off buying a home – or even deciding not to buy at all. Consider your lifestyle and your finances, and only buy a home if you are truly ready.