Buying a home can be an incredibly exciting experience, one that can send people running around all over the place trying to figure out just how exactly to find the residence of their dreams. However, just because a house is a big investment does not mean that it is impossible to understand just what you need in order to make the best choice possible for yourself and for others. You may feel the urge to buy a house, but is it the right decision? There can be advantages and disadvantages to home ownership, but when it comes to such large financial transactions, the best thing you can do is take the emotion out of your decision.
CAN YOU REALLY AFFORD THE HOME THAT YOU WANT?
Even if a certain piece of property seems like the one and only choice you should go for, you must also consider your financial stability. Will you be able to pay off your home loan without sacrificing anything from your current quality of life? Will you be able to still put away a good amount of savings while paying off your home? How many years will you have to take in order to finally pay off the entire mortgage? If you enjoy the simple things such as going out for a movie or love going out to a fancy dinner once a week, then these may be things that you will have to sacrifice in order to consistently make your payments on time.
ARE YOU READY TO BUY?
Despite what you may often hear, paying monthly rent on a lease is not necessarily wasting money, especially when your career or living arrangements are uncertain. Whether you just got a new job, your company is undergoing major changes, you are thinking about having kids or you have other family obligations, renting could be a better fit until your situation is more permanent. Renting can be the best financial decision for people who aren’t planning to stay in one place for at least five years. It is important for you to seriously evaluate your situation and buy a house when you are able and not just because you “want” one.
LOGIC VS EMOTION
Make sure you go through each and every step of the process with a level and logical head. Sometimes people make their buying decisions based on their emotions rather than on the facts and statistics that their realtor provides. If you find yourself shopping without an agent, remember that when you browse around for a house, apartment, or condo for sale on a property listing website, make sure that you set the parameters to guarantee that you are only looking at options that are actually within your budget and realistic. As much as you want to own your dream home, be as realistic as you possibly can about your financial situation. This will prevent moving into a beautiful place and live with the mountains of debt haunting you for decades after you sign the contract.
MONEY CAN’T BUY HAPPINESS
If you’re considering buying a home, rather than focusing on the emotional aspects of the decision, you should look at key financial indicators to determine whether you can truly afford it. Will you be able to get a good mortgage rate based on your finances? In particular, you’ll need to make sure you have cleaned up your credit score and paid down debt. Once that’s decided, the best approach is to have 20% of the home purchase amount saved in liquid assets outside of your other savings accounts, for example your retirement.
You will need to ask yourself a lot of questions in order to determine whether you have found the perfect home or not but there are plenty of properties out there ready for your choosing, take your time. All you have to do is to make sure that you have examined all of your personal criteria for the perfect house with a lot of critical thinking and examination. Do your research, and do not settle on the first property you see. Dig deep into the details that you need, and cross-check your references to make sure that it is the best possible decision for you; and in doing so, you should be able to make your choice confidently and without any regrets down the line.
These are simply general rules, and they will vary for some home buyers, but to have the best chances for overall financial success, remember that home purchases are large financial commitments and should be evaluated based on the facts, not emotions. Happiness may start in the home, but that doesn’t necessarily mean you’re ready to buy one. Your best bet is to make sound financial decisions without letting your emotions get the best of you and having the right realtor makes a world of difference!