Owning a home is part of the American Dream. It can also be a major disaster if you buy a house you cannot afford – or if you buy a home before you are ready for home ownership.
Let’s take a look at some of the advantages of buying a home. The most obvious benefit is that it’s yours. You can paint your kitchen red, change the landscaping, install your kid a basketball hoop, or turn your unfinished basement into a home theater and game room. Provided you follow building and zoning regulations, you can do almost anything you want with your home. Furthermore, some of your monthly mortgage payment can come back to you in the form of equity, your home can have additional tax benefits, and possibly give you the potential to sell it for more than you originally paid, creating an asset for you. When you pay rent, you will never see any of that money again.
Once you make the decision to buy a home make sure you are READY to buy a home. Consider these questions carefully to make sure you are ready for home ownership.
1. Do you have the cash for the down payment and closing cost?
2. Do you have the finances to afford the monthly mortgage?
3. Are you anticipating any major job change or change in your income? Banks and mortgage lenders typically require you to have been with your employer for at least a year or two before they will consider you for a loan.
4. Do you have an emergency fund to cover a few months of living expenses if needed?
5. What is your credit score? Your credit score determines whether a mortgage lender will give you a loan, as well as the rate you get.
6. Are you committed to staying in your home for at least 3-5 years? Buying a house is a large expense and sometimes it can be very difficult – if not impossible?
7. What are the current interest rates?
8. Are you committed to home repairs and maintenance and the commitment to home ownership?
Make sure everyone in your household is on board with the decision. This is the time to think with your head and not your heart. By doing so, you can take pride in being home owners instead of possibly finding yourself struggling to make mortgage payments or having to consider foreclosure.