For many, homeownership is the ultimate dream. They want something that feels more stable, something they can call their own and invest their time and money in. After all, it’s frustrating to constantly feel that you are wasting your money on a rental that will never be yours.
However, while owning a home may seem ideal, it’s not for everyone. There are a lot of responsibilities that come with owning a home, and it is a significant investment that requires a stable financial situation.
For some, renting is preferable as they don’t want the responsibility of keeping up with a house, or they simply don’t have the money to afford it.
Despite the apparent commitment, it’s not uncommon these days for people to go house hunting on Zillow or attend open houses just for fun.
Some entertain the idea of owning a home simply for pleasure and because it’s their dream, all the while knowing that they can’t afford it, while others poke around on sites like Zillow or attend in-person viewings with more serious intentions.
Whether you fall on either end of that spectrum or somewhere in between, the following questions can help you determine if you truly are ready for homeownership or not.
What is Your Credit Score?
First things first—how is your credit? You’ll need a mortgage loan to buy a home, and the lower your score, the lower your chances of getting a pre-approval.
Lenders do consider other factors when determining your eligibility, such as your overall credit history—not just your current score, your employment situation, all sources of income, and other various details.
So it’s not impossible to get a loan with a low score, but you will have lower monthly payments if you have a better score.
What is Your Overall Financial Situation?
Beyond your credit score, you’ll want to ensure you have a stable income or other sources of money if you’re going to buy a home.
Not only are there the down payment, monthly payments, closing costs, insurance, and taxes to consider, but you’ll also need enough money in case something goes wrong.
With rentals, your landlord is responsible for taking care of the repairs, but when you own a home, you are responsible for everything yourself.
This means having enough money to pay the utilities or to afford any necessary repairs, such as plumbing issues, structural repairs, HVAC maintenance, and more.
Will You Have Any Money Leftover Each Month?
Perhaps you’ve calculated all of the costs mentioned so far, and you think you can make it work, but have you considered your other financial responsibilities?
If you think you only have enough to barely scrape by, you might not want to buy a home just yet.
You should make enough money to comfortably cover all of your expenses and still have some left over each month to put into savings in case of emergencies.
Do You Have Other Upcoming Plans or Goals For Your Future?
Perhaps you are engaged and planning a wedding, or maybe you’re looking to do some major traveling or go back to school.
Whatever your individual situation may be, if you think there is anything else that will require a large sum of money or investment in your near future, it is possibly wise to hold off on a home purchase.
There will always be homes available for you to buy, but other opportunities might not come up so easily. It’s important to sit down and think hard about other plans or goals you have for your near future when considering homeownership.
Are You Handy With a Hammer?
Owning a home isn’t just about the financial responsibility—there are other factors to consider as well. For example, do you know your way around a toolbox?
There are lots of smaller repairs and fixes that you should know how to handle yourself before committing to buying a home. All homes, even new ones, require upkeep.
You should have the basic skills necessary to maintain a home, or at least be willing to learn. If not, you could end up wasting a lot of money paying for a professional to handle minor repairs and fixes.
Are You Ready to Commit?
While being ready to “settle down” doesn’t necessarily mean you don’t still want to go out and enjoy your life, committing to a home does ground you in a way to a specific geographic location.
You should make sure that you are satisfied with the neighborhood and the surrounding areas and what they have to offer before investing all of your money into a home.
If you think you will want to move again after only a year, you should wait until you find a home and a place that you can see yourself living in for at least five years.
Making the decision to buy a home takes time and consideration. There is so much more that goes into owning a home than your money. It is, of course, a major financial investment, but it requires time and care as well.
There are so many things to stay on top of with a home that are easy to forget about when you’ve only ever rented and had someone else taking care of everything for you. Buying a home is not something you should simply do on a whim.
However, if you have given it a lot of thought and think you’re ready, homeownership can be an enjoyable and fulfilling experience. Just make sure you have everything you need before diving into the process.
Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.