One of the major life experiences you’ll have is buying your first home. In order to succeed financially you don’t need to buy a home, but there are certain financial benefits to home ownership. During the course of your life, you are hoping that your real estate will appreciate in value, as it’s been shown to do historically. Also, at some point, your mortgage will be paid off and you’ll significantly reduce your housing costs. If you are renting, your housing costs only get higher and higher every year with inflation. Here are some things to consider when deciding to buy a home:
Get your financial ducks in a row. You should do a full analysis of your finances before you buy a house. Think about your current budget, how much debt you can afford, and what sort of financial goals you have for the future. Double check that your housing expenses will still leave room for you to save for your retirement and complete other long and short term goals. Whatever you do, don’t make your purchasing decision based on how much of a loan a lender is ready to give you.
Make the determination that now is the time. Just like the decision to have children, it will never seem like the right time to buy a house. If you don’t think that you’ll be in the same place for the next 3-5 years then you probably shouldn’t buy one. If you’re a first time home buyer this is especially true. Owning a home uses up a lot of money in the cost of the transaction. You’ll want to make sure you’ll keep the house for at least five years to make the process worthwhile. If you have other things you want to accomplish, like starting a business, you might want to wait until the business and running and making a profit before you decide buying a house is a good idea.
Do you research. Make sure you read a book about the home buying process to give yourself a primer on what it all involves. Even if it’s not your first time buying a home you’ll want to make sure you understand as much of the process as possible. Don’t simply use your own experience as your guide for this purchase.
Stand by your decision. Once you’ve decided to buy a house, stand firm in your decision. Many people might try to dissuade you or give you reasons why you should use your money for other investments or other projects. When you’ve made up your mind and done your research and ran the numbers and it’s all making sense, the best thing to do is take action and work your plan.
By: Nic Lino