Buying a home is considered a part of the American lifestyle. However, not everyone is fit to own a home. In fact, some individuals may be more comfortable renting than taking the plunge of homeownership. Let’s take a look at some of the most important questions you should ask yourself before considering buying a home.
Does It Make Financial Sense?
Depending on the area where you live, it may be cheaper to rent than it is to buy. You should see how many years it would take you to pay a mortgage compared to the cost of renting. When you know how many years it will take you to reach this break-even point, then it is time to decide if you will still be living in that area when that year rolls around. If you don’t plan on staying in your current area for many years to come, it may not make financial sense to invest money into a house.
Can You Afford A House?
Owning a home comes with many associated costs. This is something you need to financially plan for and cannot just wait to save money when you start looking at homes. There are two major financial considerations you need to make yourself aware of. These include a down payment and monthly mortgage payments. There are more costs involved in owning a home, but these are the two biggest.
A down payment for a home is a necessity. This is the money you pay upfront to fund the equity of the property. This payment proves to a lender that you serious about buying the home and have put your own money on the line. The average down payment is equal to 20 percent of the home’s value. Many lenders, such as Home First Certified, will be able to instruct you further on the necessity of a down payment price.
Mortgage payments are due monthly to the lender that agreed to finance your home loan. This payment is put towards the principal balance, interest charges, property taxes, and homeowner’s insurance. You will need to prove to a lender that you have a steady job that provides you with an income and your debt-to-income ratio is acceptable. The lender wants to ensure you will be able to pay back your obligation.
Are You Psychologically Ready To Be A Homeowner?
When you purchase a home, it will likely be your biggest investment. You will need to do maintenance to keep up with your investment. This requires your time and commitment. You need to be emotionally ready to make many decisions regarding where you want to live, what colors you want to paint the walls, and so forth. All these decisions and the immense amount of commitment required are big psychological changes that you should be prepared for before thinking of purchasing your own home.
We highly encourage you to think over these questions we mentioned above. Although the allure of owning your own house may have your head filled with a fantasy world, you need to pull your imagination back into reality. Homeownership has a lot involved and you should be prepared for these areas listed above before considering buying a home.