The responsibility of owning a home can impact your day-to-day life. But the real impact of homeownership is financial.
Your home is probably the biggest purchase you’ll ever make, and it’s a good idea to ensure you’re ready to take the plunge.
But here’s the good news — you might be more financially ready for homeownership than you think.
You have an emergency fund
It’s expensive to buy a home. The down payment, closing costs, and other fees are probably already on your radar. But other unexpected expenses can add up. You might need additional furniture to make the home livable, or the home inspection might reveal that you need to replace the air conditioning within a year.
Even though you might not use your emergency fund to pay for every expense, having one is essential so you can use incoming cash towards necessary purchases and don’t have to worry about building up your savings.
If you already have one set aside, you’re one step closer to homeownership, and you probably didn’t even realize it.
You have a downpayment
For many people, saving the downpayment is the most challenging part.
While the amount may vary, most mortgage lenders require borrowers to have a down payment. If you can save a downpayment of 20%, you can avoid private mortgage insurance (PMI) fees.
If you have a downpayment earmarked for a home purchase, you are probably in better shape to buy a home than you think.
You can comfortably afford the monthly expenses
Saving a down payment is a big deal. Still, ensuring you can afford homeownership’s monthly expenses is vital. You want to consider the mortgage payment, property taxes, home insurance, utilities, water bills, and potential HOA fees.
For some people, homeownership is cheaper than trying to find ways to pay rent every month. But for others, the monthly costs increase.
As long as you account for all the associated expenses and can comfortably afford them, you’re in solid shape to buy a home.
You can pay for moving expenses in cash
Moving is a one-time expense but another cost associated with homeownership. It could cost a few hundred to tens of thousands of dollars depending on how far you’re moving.
But regardless of the cost, it’s a good idea to make sure you can pay the fees without going into debt.
Suppose you’ve budgeted for the moving costs and can afford to pay. In that case, it’s a great sign that you’re ready for the other homeownership expenses.
You don’t intend to move for awhile
It’s expensive to move and even more costly to buy a home. If you plan to move in a year or two, you’re probably better off saving money. Plus, you can save yourself a lot of time and energy.
But if you know you intend to stay in your current city or town for at least a few years, it might be a good sign that you’re ready to buy property.
Life happens, and no one can predict the future. But if you intend to stay in the area for a while, you’re in good shape.
You’ve been paying down your debt
Your monthly expenses may increase with homeownership. Even if they don’t, you might have unexpected costs throughout homeownership.
This can include repairs, broken appliances, cosmetic changes, and more. Because of that, it’s often wise to pay off your debt before adding a mortgage to the mix.
If your debt is at a point that you’re comfortable with, it’s a good sign that you’re ready to buy.
You have a stable source of income
The costs of homeownership add up, and a stable source of income can help offset some of the sticker shock.
But before you can even spend a penny, you usually need a reliable source of income to qualify for a mortgage. Beyond that, you often need a few years of income history to be eligible for a mortgage.
If you have a job that provides a regular paycheck, you might be well on your way to home ownership.
The timing makes sense
It’s tough to predict what will happen in life, but there are some considerations when buying a home and making a big move.
For example, if you’re a parent, considering the school calendar is often a good idea, especially if your kids will change districts or school sites due to the move.
It can also be wise to look at your annual calendar of holidays, work events, travel, and more. You don’t need to postpone anything for a move, but if it seems like it’s slotting into place, it’s a good sign.
You’re ready for more responsibility
There’s almost no limit to what you need to handle as a homeowner — pests, landscaping, plumbing, electrical, safety concerns, and appliances.
For many people, the responsibility is worth it, and homeownership is a dream come true. But for others, renting and the fewer responsibilities that go with it makes more sense.
If you’re ready for extra responsibility and are excited by the challenge, you might be ready for homeownership.
You know the local market
There’s never a perfect time to buy a house. But you can always learn about your local market before you buy a home.
If you’ve attended open houses, explored different neighborhoods, and researched what to expect, you’re probably in great shape to buy in your local market.
Realistic expectations and knowledge can make all the difference.
It can be scary to take the plunge into homeownership, especially when you’re doing it for the first time.
That’s why it’s always a good idea to assess your financial fitness, check in with yourself. and learn about the market. You might be surprised by what you discover.
- Start investing today with only $500 to own shares of student housing real estate
- When students pay rent, you collect dividends — CollabHome collects millions of dollars of rent every year!
- Everyone wins: You get potential dividends paid monthly while making student housing better