Are you ready to purchase your own house? This is a question that many consider at some point in their lives. You may be ready to move out of your parents? home or maybe you have rented for years and wonder if it is time to own property of your own. The decision process is not as simple as a yes or no answer. There are many things that you should consider before buying a house. You should ask yourself the following questions.
Can you afford to purchase a property?
Purchasing a property tends to cost more than renting. You will have to make monthly mortgage payments, as well as insurance and taxes. Depending on where you live, you may also have home owner?s association fees. Your taxes can rise each year, costing you even more monthly. The general rule of thumb is that you can spend up to 30% of your monthly income on rent or mortgages, but if you are a college student living on loans or only working a part time job, you should aim for the most affordable place you can find, within reason.
It is also important to remember that there are additional costs in homeownership that many rental properties do not have. In many cases, you will have to pay for things like water and garbage disposal. You may also have to pay for lawn maintenance, such as lawn care and snow removal. Houses also require maintenance and when something breaks, you are responsible for the repairs, not a landlord.
How long do you plan on living there?
When you own property for a long period of time, you gain equity and the property becomes an investment. However, if you only plan to live in the house for a couple of years, you are likely to be underwater and owe more than the house is worth when it comes time to sell it. The average American moves about 12 times in their lifetime. When considering buying a house, think about how long you plan on staying in the house. If it is for many years, it may be a good investment, especially since you will have time to update the house as well. If you only plan on staying for a couple of years, renting may be ideal.
Do you have the ability to furnish the house?
There are other costs associated with moving into your own property. Home ownership requires you to furnish the house yourself. If you are moving from your parents? house or a small apartment, you may not have much of your own furniture. Furnishing an entire house can be expensive. If you do not have the means to furnish your house yet, you might want to consider furnished apartments instead, as furnished houses are very rare.
How is your credit?
Most people cannot afford to pay for a property in cash. Obtaining a mortgage requires great credit. Mortgagers will look at credit history, income, and length of credits. Although you may be approved for a mortgage with minimal credit, you will pay much more in interest. It can be more financially beneficial to wait to purchase your own property until you have improved your credit. Those who want to purchase a property with poor credit may also consider lease to purchase options, an option that allows you to make rental payments towards the purchase of a house, until you are ready to purchase it.
Many people question renting versus buying. Both living options have their own advantages and disadvantages. Approximately 25% of rental residents in a survey were renters by choice, meaning they prefer to live in an apartment rather than a house. If you are considering purchasing a property, be sure to ask yourself the listed questions to gauge your readiness for homeownership. When you own property, you must be prepared for unexpected costs, have the ability to make mortgage payments every month, and complete maintenance and property upkeep on your property.