So, you think you might want to buy a home? That’s exciting! But it’s also a big decision and not something which should be rushed into. If you make an error, your purchase might be a constant source of worry and regret for you and your family. You might think that you’re ready to buy property, but until you’ve asked yourself these questions, you’ll never be completely sure.
Are you absolutely certain you want to buy?
It seems that the majority of young people don’t value owning a home in the same way that the previous generation did. It could be a hesitancy to be tied to long-term loans. But it could also be their wanting to be fairly independent without tying themselves down too much. Often the costs of home ownership, depending on where you want to live, are just too high. It’s common for young people, also, to choose not to own cars. They therefore need to live close to where they work. Homeownership in these areas tend to come at exorbitant prices, so renting is the best option.
Young people don’t see homeownership as an indicator of success. They feel that building a startup, traveling the world or experimenting with extreme sports are what makes them feel successful. The reality is, there’s little point buying a home unless you’re sure you’ll stay in that area for a significant period of time. And you’ll definitely be changing your job in the near future. If you rent your home, nothing can prevent you from moving closer to the office. Now might be a good time to peruse law guides around buying and selling a house to be 100% sure of what you can and can’t do when you’re a homeowner.
Have you saved enough money?
The bigger the down payment which you’re able to put down, the better bond rates you’ll qualify for and the less you’ll have to pay in the long run. While you might be able to qualify for a home loan without having savings for a deposit, this does not mean that it’s the right thing to do. Ideally you should have saved at least 10% to 20% for your deposit. This is a massive sum of money, especially for first-time homeowners. It’s likely going to take many months of hard work and sacrifice to put this money together. It’s important to keep in mind that a deposit isn’t all you should be saving for. You’ll also need to have an emergency fund of at least three months expenses saved up. If you don’t have enough money saved up for both a down payment and an emergency fund, it might be a good idea to wait and save more first before rushing into buying.
Are you financially stable?
Having enough money saved for your down payment and emergency fund is one thing. But if owning a property puts such a strain on your finances that you struggle in other areas, it may not be worthwhile. The worst case scenario is you might not be able to pay your bond, leading to you losing your home.
It’s a common mistake for people to think that their paycheque will increase at a constant rate for the next 30 years. They think that they can struggle for a few years because later on, it will become easier and easier to pay. Sadly, salaries don’t increase the way we wish they would. Buy a house worth what you can easily afford right now. Not what you wish you were earning now.
Are you ready to settle down?
As mentioned previously, owning a home is a big responsibility which can tie you to a certain area for a considerable period of time. Owning property generally takes away some of your flexibility. What if you want to follow a loved one to another city? What if you want to live overseas for years on end? These things aren’t impossible, but they do make it more difficult. Yes, you could always rent your home. But what if they trash your home? Or what if it takes a few months for them to move in? Young people tend to value experiences over things, even cars and homes. James Hamblin, The Atlantic columnist, explains the phenomenon as follows: “Over the past decade, an abundance of psychology research has shown that experiences bring people more happiness than do possessions.”
If you feel like you’re certain you want to buy, you’ve saved enough money for a deposit and an emergency fund, you’re confident of your financial stability, and feel ready to settle down and form roots, then you can feel confident in going out and looking for property. If not, you could still be a long way from calling yourself a homeowner.