Should You Wait Before Buying a Home ?
Things to Consider Before You Buy a Home"
Lets assume that you've already determined that you can "afford" to buy a home of your own; that you know you want to enjoy the financial and emotional rewards of owning you own home; that you are understand that owning a home entails some occasional effort on your part (there's no landlord to turn to when the washer breaks or to blame when the hot water isn't hot enough), and finally, that you sure don't want to miss out on the reasonably steady increase in value of a home of your own.
Nonetheless, there are just a few reasons that might make you want to "step back" and look one more time at your situation. Here are a few of them for you to review just before you make your final decision to go ahead and fulfill the "American Dream" of home ownership.
Can you "really" afford this home ?
Ok, so you know you can handle the mortgage, interest and taxes that your lender was concerned about. Do you also have the financial ability to cover the incidental new homeowner items like a lawn mower, shovel, rake, wheelbarrow and pruners for out in the yard, plus a washer, dryer, drapes, shades rugs, and accessories for inside ? Can you handle the annual expenses for lawn fertilizer, mulch, flower plantings etc ? Or, if you're as busy as many young couples are, can you afford to pay someone to do your landscape care. How about the cost to decorate and furnish your new home so it meets needs and desires of your family. If you can't afford it all right away, can you be patient and do it a little at a time as finances permits.
Many families make rational trade-offs to make the cost of their new home work out; perhaps going out to eat a few less times each month until they get the 'start-up" costs of a new home behind them. Can you and your family do that ? Sit down and talk about these things before you leap into home ownership. An hour or two of honest discussion about this can save a lot of grief later on.
Is your family income about to change ?
Probably the most common thing that happens to a couple shortly after buying their first home is that they "start a family." If you're both employed now, have you discussed whether one of you is going to be a "stay-at-home parent" and if so, will your new reduced family income still allow you to support your home. If you're both going to continue working, have you factored in the cost of day-care for your infant if Mom doesn't live just down the street.
How long might you own the home ?
Probably the worst thing that can happen after buying a home is to find out that you need to sell it again within a year or two. If you have to sell a home before its value has appreciated enough to cover selling costs and commissions, you can put your yourself and your family into a difficult financial situation. This is especially true if you buy a home with an FHA or VA mortgage program so your down payment was less than about 10% of the purchase price.
Your selling real estate commission may average about 6% and other closing costs can add another 1.5% to 2%. So, unless the home appreciated in value by more than at least 8 - 10% while you owned it, you may have lost all or a portion of your down payment or worse, you may actually need to "write a check" to close on the sale. Don't let that happen to you. To be safe, make sure your plans include staying in your new home close to five years before you'll need to sell it for whatever reason.
Be extra careful with a new construction home
On a new construction home, you can get caught in a bind if you need to sell your home while your builder is still offering the same model home in your neighborhood. Most families would rather buy a brand new home from the builder and get their choice of carpet colors and countertops, etc. The builder may even pay part of the closing costs for buyers of brand new homes. To sell your home, you may need to price your "resale" home below the builder's current asking price and yet you've still got to absorb all the selling costs. If you can avoid it, you don't ever want to have to sell your home "in competition with your own builder." Again, to be safe, make sure your plans include staying in your new home close to five years before you'll need to sell it for any reason.
Of course, there are offsetting possibilities, if you need to sell your home shortly after buying it because of a job transfer, your employer may pick up part or all of the selling costs. On the other hand, what if your employer "downsizes" and your job is one of the ones eliminated. Or, if your home is in an area where prices are rising very rapidly, your home's value might have appreciated by enough to cover the costs of an early need to sell. Just think about all these possible outcomes before you leap into home ownership right now.
How familiar are you with the area ?
Another reason to consider delaying a home purchase is if you've just moved to an unfamiliar region. It makes sense to rent for a number of months before deciding on exactly where you want to live. If you buy a home immediately after moving to an unfamiliar area, you may find that you'd rather live in a different part of town to make your commute to work easier, or because you like the shopping better or for any of a dozen other reasons.
How solid is your family unit ?
Realtors® see some of the saddest things happen that cause premature home sales. When a marriage or partnership starts to fall apart, too often a home needs to be sold to equitably divide up the shared resources. As stated before, selling a home before it has had a chance to appreciate can create just one more financial burden in an already difficult situation.
No one expects the worst and no one should. Life would be no fun at all. But buying a home, particularly your first home is
a "really big deal" that deserves some planning for what might happen in the future. The point here is
this: "think about these things BEFORE you buy a home" so when you do buy, you'll have the joy that you deserve from owning a home of your own.
Michael Saunders & Co.
330 John Ringling Blvd
Sarasota, FL 34236