How to Tell If You're Ready to Buy a Home
Is it time to buy a home? Buying a home is a big decision that shouldn't be taken lightly. Here agents tell you how to determine if you're ready to buy.
How do you know when it's the right time to buy a home? Many people ask themselves this question, while others jump into buying a home without carefully considering what all it entails.
Eric Bramlett, the owner and broker at One Source Realty, explained that there are three questions that buyers should ask themselves to determine if they're really ready to buy.
Are you planning to stay in a home for at least three years?
Do you really want to purchase a home?
Will it cost the same or less compared to your current living situation?
Are You Planning to be in the Home for at Least Three Years
Because of the closing costs incurred, the hassle and expense of moving, possible taxes you have to pay on profits when you resell and a slew of other reasons it's best to buy when you know you'll be in a house at least three years.
This will also give you enough time to see real appreciation in the property. Most real estate markets appreciate over time. The longer you're in a home the more potential you'll have of making money on a resell, money that can be used as a down payment on another home.
Do You Really Want to Purchase a Home
What is your motivation to buy? Do you want a place you know is your own? Are you starting a family and like the stability of homeownership? Are you wanting to make money? Do you think it's time because friends, family and colleagues already own homes?
Homeownership comes with a lot of responsibilities. Taxes, insurance, lawn care and repairs are just a few. If you live in an HOA you have additional requirements and responsibilities to stay in good standing.
There is also a lot of financial responsibility. Managing a mortgage is a serious undertaking that has quite an impact on your credit, both positively and negatively. If managed incorrectly, late payments, liens or a foreclosure can bring your score down for years. As you probably know your credit score affects all aspects of your life, not just your ability to get a mortgage.
Buying a home works best when you really want to do it for the right reasons which aren't based solely on making money or trying to 'keep up with the Jones'".
Will it Cost the Same or Less Than What You Pay for Housing Now
A home is an investment that will help you build your assets but there will be expenses up front and along the way. Some of these include:
- Closing costs
- Down payment
- HOA fees
- Insurance
- Taxes
- Repairs and maintenance
For the most part, this money is going towards something you own and can resell, hopefully for a profit. If you're renting it is likely going to pay off someone else's mortgage.
Before you begin the buying process, you need to sit down and figure out if buying vs. renting is a good financial decision. Look beyond the monthly payments and consider what it costs to obtain a mortgage and manage a home as well as how this investment may pay off in the future.
Don't forget the tax factor. Homeowners get the advantage of being able to write off the interest they pay on their mortgages. This can mean receiving thousands of dollars in a tax refund, especially in the first few years when you're mainly paying interest on your mortgage.
Next Steps Before Your Home Search Begins
Think you're ready to buy a home? If so, it's important to prepare and take the right steps to make the process a success. Before you begin searching for homes you'll want to: