We love working with first time homebuyers. And, after years of helping people find their homes, we constantly get asked the same question: how do you know when it’s the right time to buy your first house? So, today, we’re here to answer that question for you!
To be honest, your home is probably the largest purchase you will make in your life. And because of that, it’s absolutely essential that you take this next big step in your life wisely. If you’re wondering if “now” is the right time to buy your first house, here are some questions you should be able to answer before you start looking.
Buying a home is exciting! But it’s also a major financial responsibility. With that being said, it’s important that you play through all of the “what if” scenarios; because unfortunately sometimes things happen that we can’t anticipate.
It’s a good idea to make a “just in case” plan. Imagine what would happen if you lost your job today, in three months and in six months. What would that loss of income look like? How would you pay your mortgage? Sit down with your spouse and work through these financial scenarios. Once you have these back up plans in place, then you are on the right track to home ownership.
There are a lot of people out there who think that renting is cheaper than buying. Unfortunately these people aren’t fully understanding the value of building equity through homeownership. The reality is that rent and mortgage are not comparable to one another. If you can afford the down payment of a house and plan on staying in your neighborhood for the next few years, it may be time for you to think about buying a home. Go ahead and do the math for yourself, though. Determine how much rent you would pay versus a mortgage for the next five years. Then make your decision based on these numbers. We think you’ll be surprised!
Determining your cost of living is an important step in the home buying process. Owning a home means more than just paying for your mortgage. In fact, there are also several other expenses that you will be financially responsible for, like:
We recommend that you add up all of your bills and expenses BEFORE your mortgage payment and keep that number in mind.
And then of course, be sure that you account for the added cost of unexpected breaks, damages and other necessary home repairs.
It is important that you take the time to create a realistic estimate of every bill or expense that will be subtracted from your account monthly. Then, after all of these expenses are added up, determine how much money is left in your account. Is there still money left over to pay for your mortgage? How much of that leftover money are you willing to put towards a house payment?
Once you buy a home you are responsible for paying for it. And while that seems pretty obvious, it’s important that you reiterate this to yourself over and over again. Payments won’t stop on your home if something should happen to you or your job.
Typically we tell people that they should look for a home that is about twice their income. Any more than that and chances are you living beyond your means. You want your home to be a decision that you can comfortable living with, not one that is leaving you strapped for cash each month.
It’s important that you aren’t draining your bank account for your down payment. As soon as you buy that house and move in, anything is possible! Your furnace could die, your pipes could break, or worse! And as much as we hate to be pointing out worse case scenarios, it’s important that you have a realistic outlook on what could happen. Be certain that you are able to set aside a little home repair fund in case any of these things should happen in your new home.
The reality is that owning a home is a major responsibility. And we want each of our buyers to be happy and content with the decision they are making. We highly recommend that you sit down and talk with your partner about all of these scenarios. And if you have any questions, please do not hesitate to reach out to us today. That’s what we’re here for: to help you take the step that is right for you.
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