You have a growing family and you feel cramped living in the apartment that, not too long ago, fulfilled your needs. You realize that it’s time to move into a bigger place, but now you face the toughest decision of your life: do you continue to rent or do you take the plunge and buy a home of your own? There are many things to take into consideration prior to making your decision such as your accumulated debt, income and the cost of owning a home.
You may think if you’re going to spend two thousand dollars a month for rent, you should just spend it on a mortgage. After all, it’s the same money and in the end, you’ll have something to show for the money you’re spending. While that’s correct, there are many other costs involved with owning a home. Unlike renting an apartment, you are now the landlord and responsible for all the repairs. This means if a pipe bursts or the roof needs replacing, it’s on you. Before venturing out and making the purchase, it’s important to have at least 3 to 6 months of your estimated monthly bills in a savings account.
You may have little or no debt now, and that’s a good thing when shopping for a home. However, things can change suddenly that can cause you to accumulate debt. You may need a new car due to an accident that’s your fault and creates a domino effect wherein your insurance rates go up, you now have to rely on public transportation or you have to acquire S22R car insurance. This is just one example of a scenario that can play out and why it’s important to purchase a home below the pre-approval amount, versus stretching your budget and going above it.
Needs and Wants
Looking for a home is an exciting time, but often becomes overwhelming. Before looking at your first home, make a list of the things you need and a few of the things you would like to have. This way when you go and look at a variety of homes you’ll know firsthand if it works for you. Most people don’t get everything they want with their first home. But, if the layout works and you have enough space, you can transform it into your dream home over time.
Living Within Your Means
If you’re serious about buying a home, you need to get smart with your money and account for every dollar you spend. Living within your means is key to a healthy financial future and maintaining ownership of your home. Along with the unexpected repairs, there are taxes that unfortunately go up each year, lawn and yard maintenance, garbage pickups, and homeowner’s insurance. If you are away from your home during the day or at night, you may also want to have an alarm system installed which is another expense. Map out everything ahead of time to see if owning a home is something you can reasonably take on and handle.
Home ownership is wonderful, if you have the resources to not only maintain it, but also afford to live the quality of life you want, while doing so.