Purchasing a new home isn’t something that you want to rush into, even if you feel a lot of pressure from family and friends to buy. There’s a lot more to buying a home than finding somewhere to store your stuff and hang your hat. When you buy a house, you’re committing to it, to the neighborhood it’s located in and to paying back a mortgage for a set amount of time. Before you make the leap and close on a home, make sure you’ve asked yourself the following questions.
Can You Afford the House?
When purchasing a new home, it’s super important that you make sure you can afford the property. Owning a home and making payments on a mortgage aren’t quite the same as renting a property. When you rent, you pay the amount of your rent to the landlord. When you own a home, you have the monthly mortgage payment to worry about, as well as property taxes, homeowner’s insurance, and private mortgage insurance, if you put down less than 20 percent of the home’s value. If you’re unsure whether renting a property is better for your wallet compared to buying, Freddie Mac has a calculator that helps you figure out the difference in cost and what you can save, or not, based on which option you choose.
Will Buying a House Get in the Way of Your Other Financial Goals?
The next question to ask yourself before you decide to buy is will the purchase interfere with your other financial goals? For example, will you need to put less towards retirement each month or to save less for an emergency every month to comfortably make the payments on your mortgage and to cover the other costs of homeownership? If the answer is yes, you might want to think about finding a less expensive home or putting off the purchase until your financial situation has changed.
Are There Any Major Issues with the House?
The condition the house is in is another thing to consider before you go ahead with the purchase. There are a few ways to find out if there are problems with the house. One is by looking at the seller’s disclosure, which will list any known issues with the property and building. The other is by hiring a neutral home inspector to look over the property. If the inspector finds any major problems, such as an electrical issue, problem with the foundation, or leaky walls, you can ask the seller to repair them before you close on the house or decide to walk away from the purchase altogether.
What is the House’s Location Like?
There’s a reason location is a major selling point in real estate. Think about where the house is --- how long will your commute to work be, will you have to drive a long distance to get to the closest supermarket or grocery store and is it near your family and friends? Ask the people who live in the neighborhood about what living there is like. Is there a sense of community or do people stay to themselves? A house might seem to have all that you want, but fall short because it’s just too far away from work or school or in an area with few amenities.
Pre-purchase counseling can help you make the right decision when you are thinking about buying a home. For help finding out if you’re ready to buy, or if you should postpone your purchase, contact us today.
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Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.
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