There’s no denying that being a homeowner is a goal for many Americans. But just because owning a home is a personal goal, or you hate the idea of “wasting money on rent” each month, that isn’t reason enough to make such an important financial decision. There are many responsibilities and “hidden” expenses that come with homeownership. So, it’s important to consider a variety of personal and market-wide factors before buying a home. Let’s review!
Personal Circumstances
Think about your life. Are you about to get married? Are you single and open to re-locating for someone you might meet in the future? Are you trying to start a family? These are all important life questions to ask yourself that will impact whether you should buy a home- and therefore be tied down.
Emergency Savings
Experts recommend not using your emergency savings for the down payment on a home. Your emergency savings is meant to be just that: for emergencies. Putting all of your money toward a home puts you at a much greater financial risk that could cause more unwanted stress in your home-buying journey.
Your Credit Score
Your credit score is another factor that greatly impacts whether you should buy a home in the near future. This is because the higher your credit score, the lower interest rates you’ll likely get on your home loan. If you have a five year goal, try getting your credit score fixed. Here are tips on how to increase your credit score.
How Long Do You Anticipate Living in the Home?
If you don’t expect to live in your home for at least five years, you might not be ready to buy. This is because it takes time for homes to appreciate. If you expect to sell your home within five years of purchase, you could potentially lose money.
Understand the Current Market Rates & Pricing
Although your personal and financial circumstances play a huge role in determining whether you should buy a home, they are not the only factors to consider. Like other parts of today’s economy, the housing market is influenced by supply and demand. Therefore, there will be constant fluctuations in market rates and housing prices. It’s important to research the area you want to live to see how homes are priced and whether they are realistically within your budget.
Is Now the Time to Buy a Home?
There’s never going to be a crystal ball that tells you the perfect time to buy a home. However, thinking responsibly about your personal and financial goals and circumstances is essential before making such a huge commitment.