One of the big financial and life milestones that our society still values is the purchase of a home. We assume that a home is going to be a solid investment, even if it's more of an emotional investment than a financial investment.
But are you really ready to buy a home? Casey Fleming is the founder of LoanGuide.com, and he has decades of experience in the mortgage industry. He sees plenty of people buy homes when they aren't ready for the financial and emotional commitments that come with home ownership.
Financial Preparation to Buy a Home
Before you buy a home, review your finances. Are you truly ready for the cost? “You need to have the savings, credit, and income to support the purchase,” says Fleming.
It's not just about saving up for a down payment. Fleming points out that there are ongoing maintenance and repair costs associated with being a homeowner. “Your landlord will no longer come when the dishwasher breaks,” he says. That's something that you are in charge of. From yard care to repairs, you are in charge of caring for your home.
Not only that, but you also need to consider the costs of insurance and property taxes. These are expenses that will impact your finances in the long run, and you need to be prepared. Also, be on guard against being house poor. The cost of paying for your home and maintaining it can mean that you don't have the money to do other things.
Emotional Preparation to Buy a Home
Don't forget that a big purchase like a home means emotional involvement as well. You need to be ready for the changes that home ownership brings into your life and the way you live it.
If you have a lot of debt, buying a home and adding to that debt will only strain you further. Additionally, both you and your partner need to be on board with the purchase. Otherwise, you'll end up unhappy over the home.
Another reality is that your lifestyle might change. “When you buy a home, your life changes,” says Fleming. “No more exotic vacations, and you usually can't pick up and go rock climbing for the weekend.”
Instead, you have duties and expenses that mean you need to consider the impact of long absences. On top of that, you have less flexibility in living arrangements. You can't just break your lease and leave when you own a home. You need to be sure that you are emotionally ready to put down roots in one place before you buy, and realize that your home ownership ties you to a specific location and lifestyle.
Before you buy a home, make sure that you are truly ready for the responsibility. This goes beyond just the financial aspects. You also need to make sure that you are ready to handle the emotional realities of home ownership. “If you don't really want to take on the lifestyle of a homeowner,” warns Fleming, “it will probably be a terrible investment.”