Whether you’re moving out of Mom and Dad’s or you’re ready for the next step in life, going from renting to owning a home is a big step in life. Buying a home is a great way to put down roots. Buying a home is also an investment since you could sell your home later down the road. Before you make the big decision, ask yourself these questions:
1. Can you afford to buy a home?
It’s no surprise that it costs a lot of money to buy a home – it could potentially be the largest purchase of your life. A down payment costs about 20% of the home’s purchase price and you need a steady income for mortgage. There are many other costs associated with a home like:
- Closing costs (2%-5% of home’s purchase price)
- Home insurance (varies by state)
- Budget for unseen repairs and emergencies
- Property Taxes
Make sure you know your finances because owning a home might not be as economical as you may think. You can use a home affordability calculator or talk to a loan officer.
2. Are you settled in your job?
This is not only important for your income, but also because you’ll need to plan on staying. Buying a home narrows your career prospects to one area or how far you’re willing to travel. You might not want to go through the time, cost, and expense of selling a home if you take a job far away, so you’ll have to decline offers.
3. Do you know where you want to live?
Make sure to pick an area where you know you’ll be happy because you’ll be there for quite a few years. It’s not easy to sell and move constantly because the transaction cost to sell is about 8%-10% of the sale price for costs. Really learn about the area and you can even rent for a few months to “test” the area.
4. How much home maintenance are you willing to tackle?
Homes can bring leaky faucets, shrubbery, mowing a lawn, and messing with the HVAC. This either means you have to become a handy family or find and pay someone to do it for you. Apartments don’t include a lot of home-related responsibilities. If something breaks, you call the landlord. Most times, you don’t have to worry about utilities.
Or, you can buy a condo or co-op where lawn and public area are maintained by hired professionals.