June 14th, 2012
You hear so much about now being the ideal time to buy. And it is. But don’t let that pressure you into buying a home that isn’t the right home.
In his blog post, “Five Questions to Ask Yourself Before Deciding to Buy,” Leonard Baron covers the major questions that may seem obvious, but that you want to stop and think about before signing that contract.
Will I own it for at least 5 years? Five years is about the break-even point for earning appreciation in value above the buying and selling transaction costs, according to Baron. So to ensure that you won’t end up losing money on the purchase, consider your plans for the next 5 years. Is your job stable? Are there other options in the area? Are you planning to get married or have kids?
Do I love the home I’m about to buy? It can get very frustrating when you’ve been searching for the right home and just can’t seem to find it. But don’t settle on a home you don’t love, or really like a lot, just because it’s a good deal, or it’s in a nice area, or you’re sick of looking. You should have no doubt that the home is right for you before making the decision.
Can I afford it? Owning a home is always more expensive than you think, so don’t take the lenders word that you can definitely afford it. Baron says:
“Lenders don’t generally take into account child care expenses, health care expenses, expensive lifestyles and habits, etc. So make sure that you can comfortably afford your housing payment, still pay your other bills, and still save at least a little more for retirement.”
Is the home in good shape? Unless you do construction for a living, fixing a home up in the long run usually costing just as much as a home in good shape.
Plus, moving is stressful enough as it is. Moving into a home and then ripping the bathroom apart is never pleasant.
Do I know enough about the neighborhood? When you find a home you love, it’s easy to look past a bad neighborhood – until you actually live there. Look into the surrounding property values and ownership, crime rates, and amenities. Talk to neighbors who are out and about. Drive by at nighttime. Research, research, research.