How To Decide When It’s Time To Buy A Home
Buying a home is a major financial decision. Nearly two thirds of Americans have invested in real estate; according to the U.S. Census Bureau, 63.7% of Americans own their home. For many, however, it can be difficult to decide when it’s the right time to buy their first home.
If you have a steady income, good credit history, and plan on staying in the same area, it can be tempting to invest in real estate by purchasing a home. However, some of us are simply better off renting. The following guide can help you determine whether or not you are ready to purchase a new home.
Your finances are in order
Purchasing a home is, primarily, a financial transaction. Because of this, it is imperative that your financial affairs are in order before taking the first steps towards homeownership. There are several basic financial benchmarks that should be met before purchasing a home; you should have a steady income, a good credit score, a low debt-to-income ratio, and enough saved for both a down payment and closing costs.
You are ready to settle down
Whether you want a yard for a dog, more space for a growing family, or simply the ability to paint the walls whatever color you want, buying a home affords you many freedoms that renting does not. Home ownership, however, seriously impacts ease of mobility; moving again within the first several years after purchase can cause homeowners to lose money. Before buying, be prepared to stay in the same home for at least three to five years in order to recoup the costs associated with closing and moving.
You can save money by buying
In many areas, purchasing a home may actually help lower your monthly payments and bills. If the amount you pay in rent each month is similar to what a mortgage payment for a similar property would be, buying instead of renting can help you save money – and build equity. The biggest difference is in upfront costs; while renting often requires fees for security deposits or background checks, closing on a home comes with thousands in closing costs.
You can fix a leak
One of the most important – yet often overlooked – aspects of homeownership is the necessary skills to maintain and repair the house. If a faucet breaks at 2 am or the hot water heater suddenly stops working, there is no longer a superintendent to call; instead, you as the homeowner are responsible for identifying – and repairing – any maintenance issues that may arise. Likewise, regular upgrades to paint, flooring, appliances, and landscaping should be made to keep the home looking its best.
The bottom line
Buying a home is a major financial decision – that ultimately comes down to personal choice. While there is no “right” time to buy a home, having a strong financial history, or saving enough for both the down payment and unexpected repairs can help make purchasing your new home an enjoyable – and profitable – experience.
by Author, May. 23, 2019