If you’ve been renting, living with family or with roommates for the past few years, you might feel it’s time to buy your own home. Or, maybe you’ve just gotten married and you and your new spouse are ready to buy a home to start a family. Before making the investment into a house, however, be sure you’re ready for the commitment. Here are three tell-tale signs that you’re ready and able to buy a home.
- 6-month reserve
There’s much more to consider when buying a home beyond just the price of the house itself. First, consider some worst-case scenarios. What if you lose your job or are unable to work? Are you able to continue to afford your home while you get back on your feet? There may also be unexpected costs that make one month’s expenses substantially more than the average. A tree could fall, a pipe could burst or an appliance may suddenly fail. These are just some of the reasons why it’s important to have plenty of money saved up before you purchase a home. The general rule of thumb is to calculate your average monthly expenses. You can do this by looking at your spending over the last 18-months and adding in an estimated mortgage payment instead of your rent payments. If you could reasonably survive for 6-months off your savings by paying that average each month, you should have enough for any unexpected circumstances.
- Staying put
If you’re forced to turn around and sell your home within two years of buying, you’re likely to lose money on the deal. In that short of a time period, the amount your home is likely to increase in value will be negated by inspection fees and real estate commissions. Some of the tax benefits you get from buying a home could be negated, as well. Of course, it’s not always up to you whether you have to move or not, but if you aren’t fairly certain that you’ll be in your new home for at least 2 years, it might not be the best time to buy.
- Household income
This last step is almost a combination of the first two. You not only need to be able to accurately estimate your finances for the foreseeable future, but you also need to have a sense of stability. You’ll want to try to estimate the annual income you and the rest of your household is likely to bring in for the next few years. This doesn’t need to be accurate to the dollar, but rather in a range. This would be where you consider details like changing to a one income household when you have a child, or if you’re planning a career change or want to start a business. If you already know any significant changes are in your future, be sure to account for them now so you can decide what your budget for a new home is and whether or not you want to buy one before that change occurs.
By going through the exercise of looking at your finances and planning accordingly, the home buying and owning process becomes much less stressful.
When you decide you’re ready to buy a new home, call us at Perry Hood Properties. We have existing homes throughout the Tulsa, Broken Arrow and Bixby area or can walk you through the building process to create your dream home.