Are You Really Ready To Buy A Home?
There are a range of benefits to owning the property you live in, but there are just as many downsides that need to be considered. If you’ve been hopping from rented property to rented property for a while now, but you’re not sure if you’re ready for home ownership, this post is for you. Here are some of the main considerations to take on board when you’re thinking about buying a home…
How Are your Finances Looking?
If you’re already struggling to keep on top of your bills and make ends meet, then buying a home is only going to exacerbate things. Ideally, you will have saved at least 10% of the home price for a down payment, bearing in mind that you’ll have to pay for private mortgage insurance if your down payment is under 20%. This is all apart from saving for your retirement, possibly starting a family, and keeping an emergency fund. By and large, if you’re not in a good position to come up with a down payment, you’re not in a good position to buy a home. You have to be able to show creditors that you have the ability and discipline to save, and use your money responsibly.
How Long are You Sticking Around?
If you read an article like this from a few decades ago, you’d probably receive an old rule of thumb that you should only buy property if you’re planning to stay there for three to five years. These days, you’re going to need an even longer period. Most financial advisers will tell you that seven years is the marker. If you’re planning to stay in one area any shorter than this, then you’re generally better off looking into houses for lease instead. When buying a home, you need to think about the costs of securing a loan, closing the sale, actually moving, and any kind of home improvements you’ll want soon after you move in. This can easily amount to several thousand dollars. Furthermore, when you come to sell, you’ll lose a fairly big chunk of the home’s value (typically around 6%) to real estate commissions. When it’s all said and done, you’d be lucky to break even after a mere five years! Consider your long-term plans carefully before committing to buying a house.
Are You Clued-Up on the Hidden Expenses?
There are several hidden costs of owning a home that many first-time buyers aren’t aware of. The majority of buyers for new homes, including townhouses and condos, have homeowner fees to look forward to. This covers the cost of shared amenities and infrastructure, adding several hundred dollars to your monthly expenses. It’s all too common for new homeowners to get surprised by assessments for special projects, not covered in the normal budget. The point here is that you have to account for all the costs of both routine maintenance, and of large projects such as roofing and fresh paintjobs. If you’re not in a position to take all the responsibilities that come with home ownership, you may need to put it off a while longer.