Plan carefully when considering a home purchase
According to a Realtor.com survey from last June, about 65% of Millennials were planning to buy a home within three months. Depending on your financial situation, however, buying may not always be the best choice. Nevertheless, if interest rates are low–as they have been for quite a while now—and your credit is good, it’s worth considering.
Here’s what you need to think about when deciding whether to buy a home:
Can you afford it? Figure out how much more a home in your price range would cost over a rental, then put that extra money aside each month to make sure you’ll be able to make the payment. Experts recommend that you spend no more than 20-25% of your monthly income on your housing payment. Also remember that you’ll also need to save for other expenses, like repairs or heating bills if your landlord previously took care of those.
Does it interfere with other financial goals? Owning generally costs more than renting, so you’ll need to make sure you can afford a higher payment without sacrificing other financial goals, such as paying off student loans, paying down debt, and putting aside money for retirement. If your purchase would endanger doing those things, you might want to consider waiting.
Are you financially stable? Is your job solid? Can you count on your paycheck remaining the same (or growing) over the next several years? You don’t want to purchase a home if your financial situation is in flux or if you’re worried about losing your job.
Equal Housing Lender