How to Know if Buying a Home is a Smart Financial Decision
Buying
If you’re considering buying a home, the first thing you’ll need to do is determine whether it’s a smart financial decision for you. While it’s true that purchasing property can be a wise investment, it can also be a financial burden if you’re not quite ready to handle it. With this in mind, it’s critical to evaluate the possibility carefully and make your decision based on your unique circumstances.
Is Now the Right Time to Buy a Home?
This is a common question among new homeowners, especially those who are taking the plunge for the first time. Here’s what you’ll have to consider before you make your decision:
Do You Have Enough Money in the Bank?
Before you purchase a home, it’s essential to ensure you have enough money in the bank to cover the down payment, which is typically 20% of the purchase price, and give you something to live on, as well. It’s never smart to clean out all your savings to buy a home. This could leave you without a back-up if you lost your job or got hurt suddenly.
If you’re not sure your finances are robust enough to support buying a home, make an appointment with a financial planner or a wealth advisor to get some additional information.
What’s the Housing Market in Your Area Look Like?
Depending on where you live, buying a home can be a fantastic investment or a nowhere road. If you’re in a fast-growing town, for example, and you have an opportunity to get into a home before the next real estate boom hits, take the leap. If housing prices in your area are stagnating, though, you might want to look for other options.
How Long Are You Planning to Stay?
Buying a home is a long-term commitment, and it doesn’t make any sense if you’re not planning to stay for the foreseeable future. While this decision typically comes down to things like job security, economic growth in your area and the decision of whether to start a family, most real estate professionals advise waiting to purchase a home if you’re not planning on staying in the area for at least five years.
Can You Get Pre-Qualified?
One of the most important things you should do before purchasing a home is get pre-qualified for a mortgage. This will give you an idea of how much you can afford, and what your monthly payments will look like. With this in mind, sit down and talk to a mortgage broker before you start the home purchase process.
Is Buying a Home Right for You?
The decision of when and if to purchase a home are big ones. Being smart about them involves looking at the entire picture, rather than just the piece that’s in front of you. If you have the resources, time, stability, and financial security to purchase a home, investing can be a fantastic option. If things are looking a bit shakier than you’d like, it may be smart to wait a few years until you’re in a better position for the move.
