Those of us tired of paying rent on an apartment or house look forward to finally owning a place to call home. The advantages of home-ownership – or more specifically, home equity – are hard to deny. However, there are a few points to consider before owning a home. None of these should discourage you setting off on your home-ownership journey:
How Long Are You In For?
Only a small percentage of new homeowners will spend their whole lives in their homes. Either they are purchasing a “starter” home they anticipate growing out of quickly, or circumstances will force a sale long before the mortgage is paid-off. Most experts advise a 7-year time horizon. That’s enough time for rising equity to offset the costs of acquiring and outfitting a home. It also allows time to recover from the multi-year market dips. Can you stay seven years?
Are you Ready for a Lawn?
Home-ownership brings responsibilities. Some learn to love them, lavishing attention to home maintenance. But most of us will find our former carefree days of small housekeep responsibility interrupted by gutter cleaning, toilet rebuilds, and – of course – lawn maintenance. Being an owner rather than a renter brings both joys and duty. It can take a while to get used to the duty part.
Do You Really Want to Live in that Neighborhood?
As a homeowner, you can’t look forward to moving out at the end of a lease. You are – in a manner of speaking – stuck with those around you. Before you buy, who will your neighbors be? Do they really like kids? Do they really not like kids? Whichever it is, are you OK with that?
And, secondarily: How convenient is the neighborhood for your lifestyle? How far is the commute? Is what you value close enough to feel handy? Will the distance to the nearest Starbucks make you feel you’re trapped on a desert island?
How Much Home Should You Buy?
A common answer is “as much as you can afford.” Mortgage interest is tax-deductible and can reduce withholding, thus increasing affordability. As a bonus, a 10% increase in market value on a $500,000 house makes for a better payday than the same 10% gain on a $50,000 house. Your appetite for risk will partially determine the right house to buy. Getting prequalified through a solid lender like Republic State Mortgage Co. can tell you what you can really afford.
Chances are you’ll love your home ownership journey. As with anything in life, it pays to start off on the right foot. By asking yourself these four simple questions, you considerably increase your chances of a successful first-time home-buying experience.