How do you know if you’re ready to buy a home? There are several major factors to consider.
Does it make sense for you to buy rather than rent?
Can you afford to buy a home?
Do you have the skills necessary to maintain a home?
Are you ready to commit to a home?
First, you must decide if it makes financial sense for you to buy a home rather than rent one.You can calculate the “breakeven horizon” of a potential home. The breakeven horizon is the amount of time it will take before paying off a home equals paying rent. If you think that you’re likely to move before you reach the breakeven horizon of a potential home, it may make more sense to rent.
Second, you must find out if you can afford to buy a home. There are several expenses to consider in home ownership. First is the down payment, or the lump sum that you pay upon buying a home. To get a good mortgage rate, it is often necessary to pay up to 20% of the total cost of the home as a down payment. However, it is also possible to find loans that will fully finance the total cost as a down payment. Next is the mortgage payment, the monthly payment you make to gain equity in your home. The mortgage payment usually includes a payment towards the price of the house, the interest on the loan, and homeowner’s insurance and property taxes. It can be very helpful to talk to a local mortgage adviser. Don't hesitate t reach out for recommendations!
Third, consider if you have the skills to maintain a home. Can you make simple home repairs yourself or will you need to constantly rely on hiring an expert to make simple repairs? This can break the bank! For a handy list of new homeowner skills, click here.
Fourth, ask yourself if you’re ready to make the kind of commitment that home ownership requires. Once you make the financial investment in a home, you will also want to make an investment of time into maintaining your home, including yard work, maintenance, and weather proofing. There are also many decisions to make, from choosing the right neighborhood to decorating your home. You must feel confident in your decisions and ready to settle in one place for a while.
Finally, it can be helpful to talk to an agent about if it makes sense for you to make this move. Feel free to call, text, or email me.