Making the decision to buy a home is a huge one, especially for those who are considering their very first home purchase. Since it is a commonly known fact that rushing into this type of decision can lead to damaging stress on family finances, relationships, and other areas of your life, it is important to proceed carefully before beginning the process. If you are feeling an increasing urge to purchase a home but are unsure of whether it is a good decision at this particular point in your life, answering the following questions can help you make a decision that you will not regret later:
Is your current income sufficient to handle the recurring costs of home ownership?
Unlike renting where your responsibilities end with paying the monthly rental fees and being a good tenant, owning a home comes with a long list of recurring expenses that can take a toll on the finances of someone who is not prepared for them. Along with the principal and interest payments, these costs can include private mortgage insurance (PMI), home insurance, maintenance, repairs, renovations, property taxes, and more.
Do you have enough money saved to cover the costs associated with the home purchase process?
The home purchase process includes costs that can surprise - and dismay - an unknowing buyer with hundreds or thousands of dollars of unexpected expenses, including the home inspection cost, appraisal fees, closing costs, insurance binder, utility deposits, service fees, and more.It is important to remember that these costs are on top of any down payment that your lender requires as part of your mortgage agreement.
Will you be staying in the area where you want to purchase a home for at least five years?
Nearly as important as the previous financial questions are whether you are planning to remain in the area for at least five years. Home buyers who are forced to sell within five years of purchase may not be able to make a profit or even break even on their original home purchase costs. Even worse, this type of situation could put you in the uncomfortable situation of owning a home in one location and being forced to live - and pay rent - in another.
If the answers to these three questions are all a resounding yes, then the purchase of a first home may well be a very positive experience for you. If, however, your answers to any of these questions is no, then moving ahead to purchase is likely to result in a negative experience. Before making a final decision either way, take time to discuss your situation and future housing goals and needs with a reputable real estate professional in your area. Their experience in helping people become homeowners can give you the information you need to make the right decision.