How Do You Know You’re Ready to Buy a House?

Buying a house is quite possibly the single largest purchase you will ever make. It’s natural to be unsure of the best time to buy and even question if it’s worth it. Investing in property and buying a home is a great financial decision, but only if the time is right and you are within your means to do so. I have put together some factors that will help you decide when the right time to buy a house is.

Do you have a 20% down payment saved?

It won’t be impossible to buy a house if you don’t have a 20% down payment on hand. It will absolutely cause you to spend more money in the long run. In order to be granted a mortgage, you have to either have a 20% down payment or be ready to make up for it in “Private Mortgage Insurance.” Depending on your situation, you could be throwing out at least $100 extra each month just to secure a mortgage. It’s best to wait until you have the preferred down payment, but it’s not the only factor you need to consider.

What about money for maintenance & repairs?

If you by your own house, say goodbye to the days of calling a landlord once (okay maybe a few times) to get something fixed. As a proud new homeowner, you might also find yourself six months down the road and the owner of a brand new water heater. In this case, I’m sure it will be an expense you won’t be too thrilled about. When it comes to home ownership, think about your income and financial situation. Would you be able to handle all necessary repairs and general upkeep on the house?

What is your plan?

Do you plan to buy a home and live in it for 20+ years? If that doesn’t seem in the cards for you, it may be best to rent until you’re actually ready to live in the same place for a long period of time. A house is expensive to buy in general, but selling again too soon can cost more than what would have been the same time in rent. After closing costs, mortgage interest, property taxes, and maintenance, you probably are not going to come out ahead.

What about market fluctuation?

This kind of piggybacks off of the question above. If you don’t plan to stay in this home for years to come, then you should be worried about the housing market fluctuations. If you buy at a decent time, but turn around to sell a few years down the road in a dip in the market, you’ll end up losing big time. On the flip side, if your plan is to purchase a house for your family and also have the hope of growing equity, you’ll have time on your side.