Renters, Are You Ready to Buy?


Family homeownershipWhen we, the renters of the world, start dreaming about becoming homeowners, our dreams consist largely of sunny, carefree images: flower-filled gardens we own, walls we paint any color we want, dinner parties we throw, yards where our kids and dogs play.

But owning a house has its challenges as well, and these aren’t just monetary. That’s why as much fun as it to dream about buying our first home, in reality we can’t make that decision unless we’re 100% awake--and educated.

Test Yourself

If you’re not sure you’re ready to stop renting and start owning, you can break the decision down to the pros and cons of both. Home ownership, for example, has the following major pros (and your list may include others, since reasons for buying are always very personal):

  • Ideally, your home builds equity over time, creating a solid long-term investment

  • Homeowners enjoy several tax breaks that renters don’t

  • The current interest rates make loans less expensive than ever to procure

  • You control your environment: you can plant/paint/decorate/have pets as much as you want. Autonomy!

  • You join a community. Though of course, renters are part of their communities, the sense of invested interest that comes from owning property tends to make people more seriously committed to the beauty, safety, and general well-being of their neighborhood.

  • You offer your family a sense of stability. Life-long friendships, holiday traditions, education and career building can all begin when you commit to one place to make your home. And (as long as you pay your mortgage), no one can evict you or (as long as you opted for a fixed mortgage) raise your monthly payments.

Weigh these advantages against potential cons of home ownership.

  • The process of buying, at the outset, can demand a lot of cash up front. Some lenders require 20% down,  while other types of loans only require 3.5% - 10%, and on average you'll need an additional 1% - 5% of the purchase price to pay closing costs.

  • The market is different now, so if you don’t want to stay in one place long enough for your home to appreciate in value, you may not gain the equity you hoped for.

  • There is no landlord who’ll come running when the sink clogs. You have to either pay for or learn to DIY all home repairs and maintenance.

Basically, the decision to buy a home is equal parts economy, emotion, and readiness. Can you afford to buy what you want and where you want? Are you ready for the commitment of maintaining a home and settling into a neighborhood? Here are a series of questions, broken into crucial categories

Homeowner expenses

  1. Income and Assets
  • Do I have a continuous, reliable source of income?

  • Have I been employed continuously for the last 2 years even if it has not been in the same job, and is it likely to continue?

  • Do I file an income tax return with the IRS each year?

  • Do I have a checking and/or savings account established with a financial institution?

  • Do I have some money saved for a down payment and closing costs?

  • Do I have money to cover moving expenses?

  • Can I afford both the mortgage and other expenses?

        2. Credit

  • Do I keep accurate records of paying my bills regularly and on time?

  • Is my total debt manageable?

  • Are all of my regular financial obligations accounted for in my total debt?

  • If I've experienced financial difficulties in the past, can I prove that it was due to events beyond my control?

        3.  Time

  • Do I have time to devote to buying a home right now?

  • Do I have time to take care of a house?

If you answer “yes” to most of them, you’re ready to take the next step toward finding your perfect home.

Resources for Additional Study

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