Undoubtedly, the purchase of a home can be one of the most rewarding and important financial decisions that a person can make in life. But the process of budgeting for a new home isn’t always easy, and potential buyers should be sure to take a hard look at their financial planning skills before they sign on the dotted line. Here are just a few great ways to find out if you can truly afford to purchase a house, and why the time might just be right to own your own home.
1. Have You Factored in Property Taxes and Repair Costs?
When we’re looking at the potential costs involved in purchasing a new house, most of us will tend to look at a mortgage payment as the main expense we’ll have each month. In certain areas, however, property taxes can add a stifling amount of money to a home’s budget. (Older houses can also be very costly to maintain.) To properly budget for a house, in other words, try making a list of potential expenses you might experience before signing off on that mortgage.
2. Have You Weighed Mortgage Costs Against Other Debts?
In and of itself, the cost of a mortgage isn’t always a prohibitive factor in the purchase of a home. When other debt payments must be made on a regular basis, however, even a reasonable mortgage payment can quickly become a burden. To know if you’re ready to buy a house, try weighing your potential mortgage payments against your other debts. If medical bills and student loan repayments would make meeting monthly mortgage costs a burden, you might want to seek out a mortgage with a lower interest rate or a less-costly house.
3. Have You Weighed Mortgage Length Options?
Even when the cost of a particular house is set in stone, the amount that a buyer will pay each month on a mortgage can vary widely depending on a number of factors. For example, a 15-year mortgage will usually carry a much higher repayment plan than a 30-year mortgage. (In the long run, however, most 30-year mortgages will end up costing a homeowner more money.) Depending on your budget, you might want to look at which mortgage option will better suit your available resources.
4. Do You Have a Financial Buffer?
To some extent, no career provides a perfect amount of job security: Recessions happen, and even top-tier companies can sometimes issue layoff announcements on short notice. When purchasing a house, however, it is a good idea to have a store of funds available for use during a rainy day. If a companywide layoff does occur, having a six-month financial buffer will significantly help you with mortgage repayment issues while you seek out a new job.
The purchase of a new house can be one of the most meaningful steps that a person can take, it is true, but it’s best to prepare oneself as much as possible for the real expenses of homeownership. Fortunately, following these tips can significantly make the process of buying a new house easier. Truly, that is homeownership at its best!