Buying your first house is an exciting, and scary, time in your life. The idea of home ownership is something that appeals to many people for a variety of reasons. There are plenty of financial benefits to be enjoyed, in addition to the autonomy of owning your own property and not having to answer to a landlord.
Of course, buying a house?is a major decision that should not be taken lightly. It will likely be the most expensive purchase you make in your entire life, and taking on a mortgage is something you need to think about before getting too far into the process. Just make sure you don’t give into the myth that buying a house is?the right thing to do in all circumstances. In some cases it’s not, so you want to make sure you avoid making a mistake that could cost you dearly.
Whether you plan on buying a house for security and stability where you can eventually sign over the rights to the property to your spouse or children using a quick claim deed form, or decide to sell it when you please, there are things you should consider before making that kind of investment.
Are You Settled in a Location?
One of the first things to think about when considering buying your first house is whether or not you expect to be settled in the same location for at least the next few years. Life can always take unexpected turns, but do your best to think ahead and decide if you plan to stay put for the time being.
If you think you might be moving in the near future, continuing to rent a place to live likely makes more sense than purchasing a home which you might have to turn back around and try to sell.
What Does Your Budget Get You?
It can be an eye opening experience for many first time buyers to realize that their budget might not be enough to purchase the kind of home they had in mind. To see how far your dollar will go, first get a good estimate of what your home buying budget would be ? there are many online calculators that can help you figure this out.
With that number in hand, browse a few real estate websites to see what kind of homes are listed in that price range. While none of this exercise is an exact science, it should give you a pretty good idea of what you will be able to afford. If the homes in your price range look attractive to you, then buying your first home might be the right choice.
What is Your Work Situation?
Qualifying for a home loan is a process that requires you to go through some extensive financial analysis by the bank or lender that you are hoping to work with. That means they will want to see plenty of documentation regarding your finances, as well as information about your current employment and work history in order to determine if they believe you’re ready to buy a home.
If you have only just started working at your job, it might be difficult to qualify for a loan. However, if you have been in your job for a year or two and have a steady earning history, the bank might be more favorable with their review. Knowing that you are considering the purchase of a home in the near future, keep your employment picture in mind when making career decisions.
There is no ?perfect? time to purchase your first house. This is especially the case when you begin to compare against what others are doing as you need to make sure it’s right for you and your situation.
What other things do you think need to be considered when looking to buy your first house? When did you purchase your first home? Where do you stand on the owning vs. renting debate?
Photo courtesy of: My Guys Moving
Wise Dollar
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Making sure your finances are in order and you are in a stable job are important. Also, make sure you look at homes that even after paying your monthly bills you still have money left over to save/invest and to go out for fun. Buying too much of home easily destroys your finances for years.
Excellent points Jon! Your last point is the exact reason why not to take the full amount the mortgage lender is offering you.
Mobility is a key consideration. Because of the real estate fees and closing costs involved in selling a home you don’t want to be doing it every few years. Young people should consider their flexibility for work and social life too.
I could not agree more Thomas. I think that gets left out with the whole you “need” to buy a house argument. I’d much rather have the mobility/flexibility as opposed to being saddled with a mortgage I don’t need.
We bought our first house in a rush, but we are taking our sweet time with our next home. There’s no need to rush it!
We were sort of the same way Michelle. The beauty with being patient is that you can save even more to put down on the one you do end up buying.
All of these points are equally important. I recommend having a sufficient emergency fund for any unexpected situation. It should get you covered at least for three months. Anything can happen and you definitely don’t want to end up in a situation where you cannot afford to pay your mortgage anymore.
Having multiple sources of income is great as well, so if one drys out, you still have another one.
And I think you can consider buying a home when your monthly payments are small enough that don’t make you a complete slave of mortgage.
Thanks for sharing and I do believe no one should rush with this decision! 🙂
Excellent point on the EF Reelika! That was something we made sure to have funded before we bought our first house. Thankfully we didn’t have to dip into it as we had some cash set aside to take care of different things, but it made us sleep better knowing we had something to fall back on in the event we needed it.
We have not settled down enough to purchase a house. We are still in that transient phase where we just don’t know where we want to end up.
I haven’t got my first house, I am still in the saving process. I think I am gonna consider my and my family’s needs so that no regrets can occur later on. Location is on top of the list.