If you’ve been renting for a while and now think you’re ready to take the big step and move into a home you can call your own, you’ll want to make sure you’re prepared. Bottom line: Owning a home is a big commitment. So before you jump into it, you should have confidence that it works for your circumstances. Here are 4 questions to ask that will help you transition into the home-buying mode, and stop renting.
1. Can you afford to buy a home?
A house likely will be the largest purchase you’ll ever make. You’ll need a down payment (typically 20 percent of the home’s purchase price) and steady income to pay your mortgage. Other fees associated with homeownership include closing costs (usually 2 percent to 5 percent of the home’s purchase price); home insurance (cost varies by state); maintenance; utilities; and budget for unforeseen repairs and emergencies. Although renting may seem more economical than owning at first glance, that’s not always the case. Use Realtor.com’s rent vs. buy calculator to help compare the costs, and you could be surprised by the results. Another good first step to figuring out whether you can afford a house is to enter your salary and town of residence into a home affordability calculator, which will show you how much you’d pay for a mortgage on a typical house in that area. Or talk with a loan officer about whether you would qualify for a mortgage, and how much you can comfortably spend. Such consultations are free and will give you a concrete idea of where you stand.
2. Are you settled in your job?
Your job situation is important in terms of having an income to buy a home, but also it will dictate if you’re likely to stay put or move. Once you own a home, your career prospects tend to narrow somewhat, mostly because a home anchors you to one area. A renter can be flexible and easily accept a job in another city or state, a homeowner might decline a job offer rather than go through the cost, time and expense of selling a home. Ultimately, it may be better to wait to purchase a house until after you’re firmly established in your employment situation.
3. Do you know where you want to live?
Moving once you own a home is not as simple as packing your bags. You should make sure that you’re choosing a home in an area where you’ll be happy. Scope out the neighborhood in advance, or even try renting for a few months to make sure you like the area before you begin shopping for a home. There is wisdom in trying before buying; which will eventually allow you to stop renting, and start on the path to ownership.
4. How much home maintenance are you willing to tackle?
If you love the challenge of fixing a leaky faucet and deciding which shrubs will flourish in your yard, then ditch renting and lean into homeownership. However, if the idea of mowing a lawn or fiddling with the HVAC depresses you, then you may want to stick with renting, which gives you a roof over your head without too much work. There’s no landlord to call if anything goes wrong; it’s all up to you. So, you have to be either adept as a handyman, or willing to find and pay someone else to do such tasks. Or else consider buying a condo, where the lawns and public areas around your home are maintained by hired help.