Thinking About Buying A Home?
Deciding on whether or not to buy a home is not an easy decision to make. Minus the financial choice, it's definitely a lifestyle choice that truly isn't for everyone. When considering your lifestyle, for the most part it all boils down to location:
Community
Deciding on a city and state is not enough, within each neighborhood you'll have to make a choice on the pockets of communities (age, race, religion) that you'd want to be a part of. Keep in mind, demographic make-up of an area can change once or twice within a lifetime.
PROXIMITY
To neighbors, types of supermarkets, transportation nodes, extracurricular activities, etc. Think about how you want to live, and then determine your trade-offs and deal breakers.
Schools
Have kids or planning to start a family? School districts can play a significant role in one's decision to own a home in a specific area.
Space
Great for someone that loves the idea of outdoor space whether it's a backyard, or a more intimate balcony. Some rentals offer garden space, or communal rooftops, but at a hefty price. However, owning may allow for more privacy.
Noise
Noise tolerance is a personal preference. Some people may be able to sleep through construction, while others may lose their minds at birds chirping. A home should be peaceful, whatever that means to you.
Finally, Financials.
Deciding to purchase a home takes cash, decent credit, and a lot of planning and patience.
Financials to consider:
There are the upfront costs, the ongoing costs, the emergency costs, and then ultimately, the parting ways costs.
Upfront
You'll need a down-payment. At least 3.5% of the sale price to be insured by the Federal Housing Authority, or at least 20% to avoid mortgage insurance altogether. You'll also need closing costs, at least 3-5% to take care of the fees and professionals that would help secure your big purchase.
Ongoing
your homeowners insurance and property taxes are critical components to keep in mind. There's also maintenance which you may be accustomed to with renting (i.e. gas, heat, electric) and then new ones like water or landscaping that comes with owning.
Emergency
Short of buying new construction, the inevitable would happen - home repairs. You'll need funds accessible to take care of these unplanned repairs. The rule of thumb: 1% of the home's value.
Lastly, if you're ready to sell and move, remember that sellers have closing costs too. Sellers have their own group of fees and professionals to pay which can total 1-3% of the sale price.
Ultimately, the decision to buy is a personal one. As with any major financial decision, do your research and make a choice good-enough for you.
Here's a list of our favorite resources:
Rent vs Own Calculator: https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
Before you buy: https://www.consumerfinance.gov/owning-a-home/
Mortgage Rates: https://www.bankrate.com/mortgages/mortgage-rates/?pointsChanged=false&searchChanged=true&mortgageType=Purchase&zipCode=10457&partnerId=br3&ttcid&userCreditScore=740&userVeteranStatus=NoMilitaryService&userHadPriorVaLoan=false&userHasVaDisabilities=false&userFirstTimeHomebuyer=false&userQuickClosing=false&userFha=false&userLowUpfrontCosts=false&userLowPayment=false&purchasePrice=470000&purchaseDownPayment=94000&purchasePropertyType=SingleFamily&purchasePropertyUse=PrimaryResidence&purchaseLoanTerms=30yr&purchasePoints=All&refinancePropertyValue=470000&refinanceLoanAmount=376000&refinancePropertyType=SingleFamily&refinancePropertyUse=PrimaryResidence&refinanceCashOutAmount=0&refinancePoints=All&refinanceLoanTerms=30yr
Understanding Mortgage Interest - Amortization Calculator: https://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
How much to budget for home repairs: https://www.discover.com/online-banking/banking-topics/how-much-should-you-budget-for-home-repairs/