Are you financially ready for home ownership? Your home is likely to be the single biggest purchase that you will ever make so before you sign on the dotted line you need to make sure you’re ready for that type of commitment. Very few people today buy their homes with cash most finance the purchase with a mortgage but mortgages aren’t just handed out randomly you will still have to qualify. Let’s look at the financial considerations of buying a home and determine if you are ready to take that step.
Think About the Future
Before you start shopping you should figure out what you want versus what you need in a house. You also need to understand your motivation, are you looking for a family home or investment property. Is your family expected to grow in the future and will you need a home to accommodate that. Knowing what you need is half the battle and you will know what to shop for.
Getting the Down Payment
The down payment is what keeps many Americans from home ownership. Regardless of the price or the type of financing on the property you are going to have to have some skin in the game. You also need to understand that home ownership is more expensive than apartment living. Not only do you have a mortgage to pay but you will have taxes and utilities on top of that.
Put together a financial plan that allows you to save for a down payment if you don’t already have one. Include things like emergency funds for when things go wrong such as furnaces needing repairs or hot water tanks. Look at how much you can reasonably afford as a mortgage payment. You might also want to speak with your bank or mortgage broker and get pre-approval it will give you a budget to work with.
Needs or Wants
You should love the home you’re buying yet at the same time separate out what you need in favor of what you want. Here is an example if you have a big family then a home with 2 bathrooms may be considered a need, but having a swimming pool in your yard is a want. Other things to consider are how close are you to good schools if you have children, the overall feel of the neighborhood and the amenities nearby, all need to work within your budget. Don’t fall in love with a house until your offer has been accepted being outbid by another buyer happens all the time.