If you are a renter, home ownership may seem like an unattainable dream. However, with today’s low interest rates and reasonable prices, buying a home could be a viable and rewarding option. Here are a few guidelines that will help you on the journey toward home ownership.
Consider the Pros and Cons
Before starting your search, make a list of the pros and cons that apply to you personally. Here are several to consider:
- Independence: When you own a home, you have control over cosmetic and functional details, from paint color to appliances to carpeting; when renting, you may be limited to the landlord’s choices and rules.
- Stability: As long as you make timely mortgage payments, you can live in your home forever. With renting, you may have to move if the landlord decides to sell, raises the rent, or just chooses not to renew your contract.
- Maintenance: As a homeowner, you are responsible for all repairs; you can’t call a landlord to correct problems. However, to help cover future repairs, you may include a home warranty in the purchase price when you buy.
- Appreciation: As a homeowner, you have a tangible asset can appreciate over time. When renting, you are essentially paying someone else’s mortgage and contributing to their investment.
For financial pros and cons, you can find online tools to help you compare the costs of renting and buying to determine which is better for you financially. Use our Rent vs Buy Calculator to do just that.
If you decide that home ownership is right for you, start planning long before you’re ready to move. Begin saving money for a down payment, insurance and taxes. Ideally, you should also have at least six months of cash reserves to cover expenses in the event of an emergency need to adjust for a life change. Find a good real estate agent and get pre-approved for a loan to determine your target price range. Use online calculators to get an idea of the monthly payment you can afford.
Make sure every decision maker in your family is on board with the responsibilities of becoming a home owner. Then take the time to find a good neighborhood. Drive by at different hours to see what the area is like. When I was looking for a home, I even sat in my car on the street to observe how heavy the traffic was.
Stroll down the sidewalk to meet neighbors and get a more personal feel for the area. Consider crime rate, noise levels and other potential issues. Check proximity to work, schools and other regular destinations. It’s not as easy to relocate once you’ve purchased a house, so make sure it’s the right place for you.
Home ownership can be a practical and rewarding decision for both singles who rent and those with a family, as long as you are prepared for the associated responsibilities. You have to live somewhere anyway, so why not make your home an investment?