That is a big question and there are some clues for you to consider! Rents are increasing and making many renters think seriously about buying a home instead of continuing to rent. There are three questions that people start asking themselves when they start thinking it's time to buy:
- Should I rent or buy?
- What kind of mortgage should I get?
- How much of a down payment do I need?
These questions are important, but there are more things to consider when you start thinking about buying. All homeowners can give you stories, some are nightmares about things they went through. There is more to buying a home then the down payment and your monthly mortgage payment. When you are renting, if something breaks, you call your landlord. When you own a home, if something breaks, you fix it or call a repairman. When you are considering a down payment, make sure you leave yourself some money to cover any repairs or other emergencies that may come up. You don't want to be "house poor" and not be able to do anything.
When you are renting if you have an emergency, your landlord may work with you on the monthly payment. With a mortgage, you have to pay the monthly payment on time or face foreclosure. You need to make sure your property taxes are paid each year. If they are part of your mortgage payment, it can make it easier. If you have an association, that bill has to be paid or the association can foreclose on you. However, home ownership can help with stability and you establish roots in your community. You get to know your neighbors, you have the security of knowing you have a home to go to.
For those questioning if they are ready to buy a home, here are some signs that you are ready:
- You have money set aside for reserves, ideally about 6 months of your monthly living expenses. That way if something happens you know you have money there to help cover any emergencies.
- You do not expect to move in the next couple of years. You do not want to buy a home and find out you need to sell it right away.
- You have an idea of your income for the next few years and know it is not going to decrease.
Home ownership is a great way to build a nest egg, hopefully your home will gain value and allow you to sell sometime down the road and move into your next dream home! As your home appreciates in value, you know you have an asset that you can eventually sell to see that gain on your investment. Your home is also a place for you to call yours. You can decorate it, you can remodel it, you can make any changes you want to it and there isn't a landlord to tell you no.