Buying a house is a big step. It’s among the biggest purchases you will make in your life. So, before you make such a huge purchase, you need to ask yourself some hard questions to help you make a better decision.
To make the whole process easy for you, we have come up with the five topmost questions you need to have in mind before buying a house. Go through the article to find out more.
1. Why Are You buying the house?
You just don’t wake up one morning and decide to buy a house. There are a lot of factors to consider. You need a good real estate agent. Also, you need to have a real reason to buy a house. Research has shown millennials who rushed to buy a house regret the action later.
Some of their regrets come from the mortgage payment, and the house has its maintenance expenses too. Why are you buying the house? Are you planning for retirement? For the kids? As a financial move?
As you consider buying a house, remember there are many costs involved in the process. Talk to your real estate agent and analyze if it’s really worth it to buy one.
2. How Long do you plan to live in the area?
Today you may feel you want to settle in one area, but what if something changes? What if a better option comes up in a different area. Are you willing to sell that house and move? You should stay in your house for around three years to five years before thinking of moving out.
You need around five years to make sure you complete the whole mortgage payment to take another one for the other house and avoid straining yourself too much financially.
Additionally, there is some extra cost that comes with buying the house. There are closing costs which are around 2% to 5% of the house cost. When you sell the home, you won’t be able to recover the closing cost.
The only time you can recover the money is when the house price goes up, which happens in rare times. If you don’t stay in a house for more than five years, buying that house won’t pay off.
3. What Is Your Budget?
Are you in a position to afford the purchase? What’s your budget? What’s your credit score? Can you afford the house? Your mortgage’s full payment should not be over 25% of your gross income.
For potential homebuyers with minimum debts or no debts at all, feel free to have an additional 3% allowance. If you have two mortgages to pay, have the payments combine then weigh them as one unit.
When all your debts and other payments, mortgage included, should not be more than 33% of the gross income you make per month. It is important to be clear-sighted about the future and your income to avoid losing the house if your budget gets strained.
4. What is Your Future Income Projection?
Renting is convenient for people with unstable income. This is because you can easily change your living conditions in case your income flow reduces. On the other hand, if you have a stable job, buying a new home is a wise investment.
If you have a commission as part of your income, consider how variable it is. Think about the future income that you are likely to get. Also, consider the career paths you take and how much they are likely to bring.
Avoid making assumptions of better pay without signs of an income raise. Ask yourself if the field you are working in has the potential to grow or stagnate on the same level, and whether you can afford a service like Richard Morrison’s Vancouver Homes with your salary.
Consider how fast you can bounce back to a stable income in case you lose your current job.
5. Are You Ready for the Responsibility?
There are some responsibilities that come along with owning a house. You will be the primary caretaker of this new home. All maintenance from repairs when the need arises need to get done. The garden, too, needs attention. If there are electrical power or water shortage issues, you need to respond to them with the required agency.
If you are ready for such responsibilities, go ahead and make the purchase. However, if you are not prepared, get a way of balancing your finances and attention. You can begin by setting aside a budget for home repairs.
The other expense is home insurance. There are things in your home that must be insured to reduce the cost of buying new ones whenever catastrophes occur. It is also important to think about the cost of buying new furniture whenever you desire to upgrade the home. Are you able to know when you need new furniture or utensils?
Buying a house requires you to internalize the responsibilities involved. Decide whether you are ready for the commitment before you buy the home. Look at the reasons for driving you to make the purchase. Are they worth it? Is this a house you intend to stay in the long-term?
We’ve addressed some critical questions that you need to ask yourself before buying a home. They should be able to guide you in making the right decision.