With the ever increasing rent costs and mortgage affordable rates in the past years, it’s not wonder many people look into home buying more than before.
Not to mention that, if you already have a family (or want to start one), owning a home is a really good way to leave ‘something’ behind and help your kids kickstart their lives with a decent inheritance.
Whatever your reasons are, if home buying makes sense for your family here are 5 questions you need to ask yourself before you take the plunge.
Have you saved enough for a bigger down payment?
There are few options for people with little or no down payment, but usually these are costly ways to get a mortgage.
Ideally, your credit score should be in top condition and your savings account properly cushioned for a larger down payment.
As soon as these conditions are met and you can qualify for a better mortgage deal, you can start looking around to find your ideal home.
Until then, save aggressively and budget, to solve all your financial problems before getting into a bigger one: a costly mortgage.
Are you really in the position to take on a mortgage?
Buying a home doesn’t mean only saving money for a down payment. It doesn’t even mean covering the monthly payments for decades.
There’s more to it.
From property taxes to home insurance and then costly maintenance and repair costs .. you’ll need to pay for everything.
Homes are affordable today, but there are still a huge financial burden for a family.
After you study your current budget, think about your spending behavior and income, is a mortgage something you can really afford?
If housing would take a big portion of your paycheck, you need to reconsider your plan and maybe wait a little more, until you can afford this.
How much time do you plan to stay in this location?
It’s impossible to foresee the future but, if you plan to move out of the city anytime soon, maybe buying a home isn’t the better option.
One of the main advantages of renting vs. buying a home is that it’s easier to move to another city area or another state, if needed, without having to worry with finding tenants or selling the home.
This is the reason many families postpone buying a home, so that they can move easier.
If you see yourself staying in a certain location for more time, it makes sense to start looking to become a home owner.
Is it better to buy a home or build it yourself?
A home can be purchased already built (there are Pros and Cons of Buying an Already Built House to this) or you can start from an empty lot and build the home of your dreams.
There’s no sure answer to this question, but it really depends on how much money you have available and the time you can spend building.
Don’t forget that, whatever your projected building costs are, you are most likely to go over budget at least 30-50% percent. Budget for this, so that you are not left penniless and without a home to live in.
If the home is already built, it’s easier to budget for this (the price you’ll pay, plus taxes and initial repair costs).
Of course, if the house is older, there might be hidden flaws you cannot see at an initial home inspection.
Write down all the pros and cons of building vs. buying and see which path makes more sense to you.
Do you need an apartment or a big house?
For a very small family or someone who still lives alone, buying a big house doesn’t make sense.
On the other hand, cramming a family with 3 kids and a dog in a studio apartment can work for few months, but it’s not a long term plan.
When budgeting for a home, you need to take into account many aspects: starting from the home size itself and the amenities you really need, closeness to good schools (if you have small kids who need to enter the educational system), your technical skills (should you need to do home repairs, instead of getting the condo administrator to work on them) and so on.
These are just 5 questions you need to ask yourself, if you are into home buying and ready to purchase your home.