For most people, owning a home is an achievement. But more than just getting personal satisfaction, a home is an investment for your future wellbeing. For example, you can use the equity in your home as security for financing.
The property boom experienced in the recent past seems to have passed away. Home prices are now stable and interest rates are near an all-time low. This is the perfect time to buy a home. However, buying a house is a big investment. As with all investments, it is better to be cautious with your venture than to do things in a rush.
It is rare that you will fall in love with the first house you see. And in many cases it is rare to find a home you love that would be within your budget. Hence, when buying a home you have to do your research. When house hunting, consider the following factors:
- Down payment
With the property bubble burst, it is no longer a guarantee that your home will appreciate in value in the short run. In some instances, property prices drop instead of rising. To protect against depreciating home values, a non-refundable down payment is required. Are you ready to forfeit the down payment required?
- Costs of maintaining a home
Home ownership comes with responsibilities such as renovations and maintenance. Over time, you will need to repair broken doors and windows, paint the walls, among other things. Are you ready for the repair costs that come with owning a home?
- Ready to settle in one place
If you see yourself moving to a different town in a few years, then it is not the best time to buy a home. For instance, if you anticipate that your employer will transfer you to another city then buying a home in your current city is not advisable. The closing cost of the sale of your home can take long time to recoup.
- Compare renting against paying mortgage
Compare the cost of renting to paying a mortgage. If the monthly rent is cheaper than the monthly mortgage payment then you are better off renting. Assuming everything stays constant; compare the amount you will pay as rent for fifteen years and the amount you would have paid as mortgage in the same period.