After watching HGTV or going to a housewarming, you may have a bit of new-home envy—and you may find yourself wanting to buy a home of your own. However, if there's anything to be learned from the housing market meltdown, it's that buying before you're ready can have severe consequences. Below are some questions you should ask yourself before committing to homeownership.
Is My Income Stable?
Can you rely on making the same or more income for at least the next seven years? That's typically how long a person needs to remain in a home before they can sell it without being left in debt. If your job isn't going well, or you think you'll be unemployed soon, you should reconsider a new home purchase. Most experts recommend having savings sufficient to pay at least three months' worth of bills, which can be hard to do after raiding your fund for a deposit on a home.
What Will We Need Later?
If you are planning to start a family within the next several years, you should search for a home with additional space—and you shouldn't bank on being able to sell and move into a bigger place once you're expecting a child. Consider your parents' future needs; will they need or want to move in as they age? If you have more space than you need right now, you can use it as a guest room until your needs change.
What Can I Afford?
For most, a home purchase is the single biggest investment they will ever make. Buying more home than you can afford is a real danger, and that's why it's important to have a budget. Consult a mortgage lender to determine what you qualify for, but beware: Just because the bank approves you, doesn't mean you can afford a big loan without making sacrifices.
What Can I do to Afford a New Home?
If you cannot afford the home you want, you will have to change your standards. Are you OK with driving further to work each day? Is a huge back yard really important? Can you accept living in an area with lower-rated schools? You should have a list of wants and needs before you start your search for a new home, especially if you're buying a home with a spouse. When you know what you can afford, it's easier to find what you really need.
For help with buying a house, drawing up closing agreements, and working with lenders, contact a company like Beran Law Office.