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Should I Buy a House Now?

FOR MANY PEOPLE, buying a home is one of the biggest decisions of their lives. Purchasing a home can be a fun and exciting prospect, but it’s also a huge choice and there are many things that prospective homeowners should consider before deciding to buy.

A good first step is to simply ask yourself: “Should I buy a house right now?” The answer may not be as clear-cut as you think, as there are many details to contemplate. Those include your current life circumstances, career trajectory, your financial makeup and asking yourself whether you’re ready to become a homeowner.

Think About the Big Picture

Perhaps the most critical factor in determining whether you’re ready to buy is also the most all-encompassing. It’s getting a sense of where you are in life – your relationship status, whether you have children or pets, your age, your career prospects and more.

Because everyone is in different stages of their lives, there’s no easy way to say for sure who is or isn’t ready to buy a house. That’s why it’s incredibly important to be honest with yourself and to ponder some big questions:

  • What do you think your life will be like in five years?
  • Will you have a family?
  • Will you still be interested in living in your current city?

Life happens fast, and things change rapidly. A home that works for you today may not in a few years. That’s why it’s so important to recognize your life goals, and what lies ahead.

Also, take stock of where you are with your job or career. While you may be tied to a certain geographic location for the time being, is it possible that you’ll want to move in the near future? Or your job may allow you to work remotely on a permanent basis, opening up new options as to where you may want to live.

The most important thing to think about is where you might be in the coming years, and anticipate what your future needs will be from a home.

Get Your (Financial) House in Order

In order to buy a home, you’ll need to have the financial resources to make the purchase. However, that means more than just having enough money saved up for a down payment.

Step back and take a holistic view of your finances and how your savings, investments or financial history may affect your ability to purchase a home. That can include the following:

  • Down payment. You’ll need access for funds for your down payment. For a conventional mortgage with private mortgage insurance, that amounts to 20% of the home’s purchase price but can be for more. You may be able to qualify for mortgage programs that require a lower down payment.
  • Credit score and credit history. Make sure your credit score is good enough to fetch you a good interest rate on your mortgage. If it needs work, focus on building it up – it could save you a lot of money down the road.
  • Other debt. When possible, you want to pay down your debt. Outstanding debts, be it student loans or credit card balances, will eat up your budget, and could affect your ability to make your monthly payments or be considered a strong candidate in a multiple bid situation.
  • Slush fund. Ideally, you’ll want some extra funds saved up to cover unexpected post-purchase expenses, like repairs and renovations, closing costs or even homeowners association fees or maintenance fees. Some properties (for example, New York City co-ops) have certain post-purchase liquidity requirements, too. That basically means that you’ll have to prove you’ll have some money left over after you purchase your home, and have a financial safety net in place.

Depending on your personal situation, there may be other things to acknowledge. But the main point is to try and have more money than you need before you make an offer, so that you can not only afford to buy a home, but also to make it yours.

Knowing what you can afford as a prospective homeowner is also critical. Again, taking a holistic view of your finances will help you figure out what you can truly afford, and what may be a stretch. It’s a bit more complicated than simply plugging numbers into an online calculator – homeowners must consider a lot more than just the sticker price.

Are You Ready to Become a Homeowner?

A final factor to think about is whether you feel that you’re truly ready to become a homeowner. Many people making the transition from renter to homeowner can be surprised at just how much work it is, and the additional expenses they can encounter. It’s a large shift in responsibilities that many new homeowners are not ready for.

For example, homeowners can’t call a landlord when their refrigerator breaks or if their bathtub is leaking – they need to fix it (or hire someone to fix it) themselves. You’ll also be on the hook for paying all of the utility bills including gas, electric, water and garbage, whereas many renters get some or all of their utilities as a part of their monthly rent payment.

And of course, don’t forget about property taxes and homeowners insurance costs, which renters also don’t need to worry about.

You may also want to do some research to find out if buying a home is actually worth it based on your situation and where you want to live. There are times when renting is more financially advantageous. Consider the actual costs of renting versus those of homeownership, especially in high-priced areas. If the timing isn’t right, it may be a good idea to keep saving money and waiting for more favorable market or life conditions.

Take Everything Into Consideration Before You Buy

While this is a lot to consider, remember that buying a home is a big decision. It warrants a deep level of contemplation to make sure you’re making the right move. It’s also a big commitment – remember that being a homeowner isn’t necessarily for everyone.

The financial aspect of buying a home is only one dimension. Keep the future in mind, try to get a sense of the direction that your life and career are headed, and really think about how or if you can handle the extra responsibilities that come with homeownership.

That being said, buying a home can be a wonderful decision from both a financial and personal satisfaction standpoint. It’s one of the most rewarding choices many people say they have ever made.



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