Investing in your own home is a huge investment. You need to be in the right financial and emotional status in your life in order to take that big step. Aside from learning the ropes of being a responsible homeowner, you must first evaluate a few factors to determine if you’re really ready to make this investment.
Know the Costs Involved
The down payment for your new home is not the only cost involved with investing in the property. It is important that you educate yourself on the other costs and fees to be settled or you will be caught off-guard. Among the basic fees that you will have to cover include the mortgage fees, insurance, property tax, closing costs and other basic utilities. In addition to the payments you would have to settle to secure ownership to your new home, think about the repair needed (if any) and maintenance costs of your house.
Evaluate Your Financial Capability
This is one of the most important things to consider when trying to determine if you are ready to buy your own home. How will you be able to afford the house? Can you sustain the long term cost of mortgage payment and the maintenance for your new home?
To give you a definitive idea on whether you are financially capable to buy a house, here are more factors to look into:
- You are financially stable and independent. It means you have an existing emergency fund in place and you have a savings or retirement account that you have started. It is also important that you have closed off any existing debts.
- You have good to excellent credit rating. This is not just important in order to get approved for a home loan, but also for your own financial standing. Remember that you will be shelling out a great deal of money for the purchase of your new property.
- Consider your living expenses. You have to consider your living expenses on top of your monthly mortgage payments in comparison with your monthly income. Make sure you still have enough money left after the mortgage payment to cover for maintenance, food, and other basic commodities.
A lot of new homeowners dismiss this when evaluating their capacity to own a new home. But you should know better. You have to look at your lifestyle and whether it is conducive to home ownership. Are you willing to make lifestyle changes to gradually reduce your cost of living? Do you understand how to save? These are only a few areas to look into with regards to your lifestyle choices if you are serious about buying a new home.
Plan to Stay
Buying a new house is more expensive as compared to paying for rent. Therefore, you need to make the most of the high cost involved by opting to stay in the house you’ve invested in for at least 5 years. The longer you plan on staying in that house, the better.
You have to consider that there are several other living expenses that you need to cover, on top of paying for your house. Hence, if you can live in the property you have just invested in, you can eliminate other expenses (such as paying for rent) and make the most of the payment you made on the house. If you have invested a lot of money on the house with a plan on selling it after a short period of time, you expose yourself to great market risks and inability to break even with the cost of buying that house in the first place.
All of the above factors should point towards the same thing before you can proceed to buying a home. You have to be smart about your choices because of the amount of money involved.