There are many questions to consider if you want to move residence from an apartment to a house. This is also considering if you’re financially ready or not. Do you have an idea of how many yards you want and how you are going to maintain it? Do you need a big living space? What challenges would you face when owning a house rather than renting a home? How are you going to protect your home and belongings financially?
You might be thinking about renting or buying a house right now. That said, here are five questions to ponder that may help you determine what would be your best choice.
Are You Financially Prepared to Buy?
If you’ve been eyeing homeownership, you are probably familiar with the down payment you will need to save up for. Also, consider checking your credit history and if you have any outstanding debt right now it would be better to pay it off first before applying for a mortgage. For those who just got a job or just have finished spending or paying something of a large amount as a financial obligation, like a wedding, a new car, car accessories, paid off a student loan, hold off the homeownership for now and get your finances sorted out first; let yourself bounce back and recover from these big expenses that you’ve spent on before jumping into a bigger financial obligation that is homeownership.
You would also want to determine what kind of home you are planning and figure out what your cost of living would be. It is important to set expectations and add a little more to your allowance so you could determine what if you can maintain owning a house considering the actual price to pay and the maintenance that comes with it.
Remember, if you are set on buying a home, some homeowners insurance policies come with a discount. This is when they are bundled with auto or other policies. Make sure to look into these kinds of considerations to help you save more money while buying a house.
What’s Happening in the Local Real Estate Market?
To determine when is the right time to buy or rent a home, one should study the local real estate market’s trends such as the rise and fall of the prices and when these specific ups-and-downs of prices happen. You would feel the need to buy immediately if you see that home prices are starting to rise. This is because of the fear that it might rise up even more if you won’t get it now. The fear is that if you waited it out too long and it will take time for it to go back down again.
In doing so, you feel you’re delaying other plans such as getting a new car would help you save up for the house. At the same time, this prepares you financially without spending too much on another financial obligation before getting a house, you can also start stepping up your savings to afford the down payment faster, these would be the natural reactions to this kind of rise in home prices – either you wait for it to go down or grab the opportunity at hand while you still can.
Another option is that you may want to delay buying a house for now and extend your stay in your rented apartment, while you wait for the house prices to drop. Studying the rise and fall of these home prices could help you determine when would be the best time to buy a home or just keep on renting for now, if the price does rise you can either choose to stay and wait for it to drop, or buy it now and don’t miss the chance while it is still within your budget. It may be unpredictable and a huge risk, but consider your finances and your expected expenses. Interest rates play a big factor in the total amount of your mortgage because it will affect the real estate market, which comes around with the previous topic in choosing your buy or rent decision.
Do You Expect to Move Again?
If you are not planning to stay that long in a house, it might not be a good decision to purchase one right now because it would incur costs that would have no sense in the future if you are going to leave soon, especially those one-time costs that come when you actually buy a house. You might be spending major repairs on a house that you will get off in the future and not living in it would be a waste.
Depending on the length of time that you plan to spend on that house, you might want to discuss this with your mortgage lender so that they could guide you in choosing the best loan product for you if you do need to buy a house now, talking to your mortgage lender could also help you prepare on the possible expenses that you might experience on the house that you want to buy for yourself or your family in the future. Review your time frame and scheduled time for moving and find out when you would want to add value and equity to the house that you bought.
Are You Ready to Handle Homeowner Responsibilities?
Maximize your time, set expectations by studying what expenses would you face when you become a homeowner. One of the advantages of renting a house is that you can ask your landlord for help when something inside the apartment is broken. If you’re a homeowner, the costs and probably labor would all be on you. You might need to learn how to maintain and repair parts of your house to save money or spend money on asking or hiring someone to do it for you. You must have the initiative to learn to do things yourself if you want to cut costs in your home maintenance.
Home insurance and taxes are considered as necessary expenses and should not be ignored, look carefully into it and make sure that your monthly housing budget is enough to cover all of these to protect your home and your belongings in it. And you might want to add some allowance into it – build an emergency savings fund. The emergency savings fund would be a big help for large homeowner expenses whenever something happens and needs a major repair or if you need new appliances (like a new fridge) in your new home, since it is an emergency you would not know when you would need it. And having to spend a large amount on a financial obligation like buying a house, an emergency fund could be your backup plan when something would come up.
What Type of Home Do do You Want?
Aside from factors that you might want to consider, determining what house your budget can afford and what type of home you are going to need is also important. You may want to buy a small house for now but are you willing to buy a larger one when the time comes that your family grows and you would need to move? Comparing the size of houses, be it large or small, would give you an idea of how much maintenance it would cost.
For a large house, with a large yard, you might be needing more pipes for the whole house and from there you could determine that there would be more than one or two pipes that could break hence making your maintenance cost larger times or N times your house.
If you want a small house, you might need to move sooner or later if you are planning to have a big family. If not you could determine that a small house might have a smaller and cheaper maintenance cost. A small house would be good if you do not plan on moving out in the future. You might have to wait for a little more if you do plan to move anytime soon. Seeing the costs and what you and the future you (and your family) would need could help you make a decision if you are going to buy a new house now or just wait until you are ready and sure of what type of house you really want in the future.
It’s Your Future
Having your own home would be a dream come true as it will put value in your future and also you would be proud to have a place that you can call your own. If you are dead set on buying a house on your own and get out of having to pay rent for an apartment, have careful consideration and study of the costs and responsibilities that come with owning a house – this would help you have more confidence as a potential buy in the real estate market in the future.