Owning a home is often thought of as an integral part of the American dream, but plunging into the commitment when you aren’t truly ready can create a financial nightmare. A home is a major purchase, and it is one that should be approached after careful thought and preparation. According to a report issued by the U.S. Census Bureau, roughly 63 percent of Americans owned their home at the beginning of 2017. How do you know if you are ready to join these homeowners? What should you be thinking about as you consider when to buy your first home? As you ponder the possibilities of homeownership, consider the following factors to make a confident decision.
When to Buy Your First Home
Are You Ready?
How stable is your life? Have you found an area where you want to live for the next few years, or are you eager to explore new places? Will you need to move in the near future for school, work, or personal reasons? Buying a house involves certain upfront costs. As U.S. News and World Reports explains, these expenses are generally recouped if you stay in the home for a period of five years or more, but people who buy only to turn around and sell quickly run a much higher risk of doing so at a loss. If you are prone to itchy feet or think it’s likely that you will need to relocate in the near future, you’re probably better off remaining a renter for now. However, if you find an area that you love and are ready to put down roots for a while, buying a home might make sense for you.
Homeowners enjoy a great deal of freedom when it comes to shaping their personal environment (source). People who own their own homes can decide how to decorate them, how to maintain or improve them, whether to have pets, and more without worrying about obtaining a landlord’s permission. However, this freedom comes with the responsibility of maintaining and repairing the property. Are you comfortable with taking on these responsibilities? When thinking about when to buy your first home, ask yourself if you are emotionally, mentally, and financially ready for the responsibilities that come with being a homeowner.
The availability of desirable housing is another issue to consider as you ponder when to buy your first home. If there are plenty of rental properties where you’d be happy to reside available, then renting can seem like an appealing option. However, as Quartz indicates, it can be difficult to rent the house that you want in many areas. If buying is the only way to secure the type of housing that you truly want, you may need to get serious about buying.
The Cost of Renting Versus the Cost of Buying
The financial aspects involved with buying a home will likely make a huge impact on your decision, and you will need to consider a few different angles. For starters, how does the cost of renting compare to the cost of buying a home? To truly evaluate this, you need to think beyond how a monthly rent payment compares to a monthly mortgage payment. You will also need to weigh factors like changes in your insurance, travel expenses, and maintenance costs. Finally, ponder potential tax benefits and the advantages of earning equity. While it’s a complicated calculation, there are several online tools like this Rent vs. Buy Calculator that can help you in your evaluation. You may wish to consult with a financial advisor as well.
Your Financial Resources
When it comes to determining when to buy your first home, your personal finances may act as the deciding factor. Are you financially ready to be a homeowner? As Credit.com explains, you will need to be financially stable with a steady source of income that won’t be strained by a mortgage payment, a solid credit score that will allow you to secure a mortgage, and the resources to make a suitable down payment. While a less-than-perfect credit score or a small down payment won’t necessarily make homeownership impossible, they can make it more expensive. People with stellar credit scores and healthy down payments generally receive better mortgage terms, so prospective home buyers may benefit from waiting, polishing up their credit scores, and getting their finances in order before purchasing a house.
Before making any purchase, it’s wise to know how much you have to spend, so if you’re considering buying your first home, explore how much a mortgage lender would be willing to lend you. According to Investopedia, getting preapproved for a mortgage is a good way to get a clear picture of what you will be able to afford. It will also come in handy when you’re ready to make an offer on a home.
Are you ready to buy your first home? If you live in the Kansas City area, contact PrimeLending today. Our committed team will help you navigate the home hunting process so that you can purchase the home of your dreams. At our branches located throughout Kansas City, we can help you explore our wide variety of loan products and programs. Plus, PrimeLending utilizes delegated underwriting, local appraisers, and cutting-edge technology to accelerate the underwriting and closing processes. We’re more than happy to navigate you through the process of buying your first home. When you’re ready to learn more, please give us a call at 844-701-5626.