How can you know when you are ready to switch from renting to owning? There are no hard and fast rules, but there are certain options to bear in mind before deciding. It's a good idea to consult with a trusted financial advisor before making a final decision to invest in a home.
What are the going prices for homes in your area? Knowing what sellers are asking can give you an idea of whether or not your budget can include a mortgage. Try checking out the local real estate listings of the neighborhoods you are considering. Are the homes you like within your budget? Do they meet your family's current and future needs? Try asking local real estate agents how the market in your area is doing. Do they think prices are falling or rising? How long do they think the current trend will last? How they answer can help you decide if you are ready to put down roots or if you need to wait a bit longer.
Your resolve may be strong, but what about your budget? You might want to take a serious and clear-eyed look at what you owe, your monthly expenses, and the mortgage you'd be comfortable with. You want a home, but you don't want to be stressed each month about making the payment. If you can handle a monthly mortgage, buying a home can be a solid way to build some financial security. But if you are spending too much on your mortgage-which is generally more than 30 percent of your income-you might be "house poor."
Many first-time buyers may not be aware of the additional costs, such as insurance and taxes, which are part of home ownership. If you forget to factor in these expenses to your budget, you could be in for an unpleasant surprise. In addition to insurance and taxes, there are also closing costs to consider when you purchase a home. These upfront expenses can include such things as title and settlement fees, prepaid taxes or home owner's insurance, as well as any home owner's association (HOA) dues. Also, unlike renting, owning a home means you are responsible for fixing anything that breaks-from the garbage disposal to the leaky roof. Having an emergency maintenance fund set aside for such unexpected expenses can make the transition from renter to owner easier.
Finally, think about selling your home down the road. It may sound crazy, but more than likely you will sell some day and you want your home to appeal to other buyers. Consider details like the local public schools, even if you don't have children. You also might want to take the time to scope out any potential changes in zoning or future building that may happen near your home. Any of these issues can affect your home's value and future resale price.
This article is general in nature and does not constitute legal, tax, or investment advice. SunTrust makes no warranties as to accuracy or completeness of this information, does not endorse any non-SunTrust companies, products, or services described here, and takes no liability for your use of this information.