How to Know When You’re Ready to Buy a Home

May 08, 2014

Real estate purchase is an important investmentIf you are still renting, you’ve likely gotten some pressure from those around you to buy a home. But homeownership is a major commitment that requires extensive research, knowledge, thorough preparation and careful consideration.

Buying a home in Chicago is a great investment, but how do you know if you’re ready to buy?

Would you be able to rent the home out if needed and cover your mortgage? If you needed to move out of the house for some reason (a medical emergency or other financial crisis), could you rent your home out at a market-appropriate rent that would cover your mortgage, taxes and insurance? Do some research in advance about rents on similar homes in the neighborhood to make sure that you could get enough from renting your home out to cover your mortgage and expenses. Getting the mortgage “rentable” might require a lower sales price, higher down payment or reduced interest rate.

Do you plan on staying put for a while? If there is a possibility that you will be moving in the next few years, you may want to just continue renting. While no one can completely forecast their future, you are the most accurate predictor of your own likelihood to stay in or leave an area. If you think there’s a possibility that you will be moving in the next few years (due to a job change or other reason), you probably should not buy at this point (unless you are looking to buy an investment property). However, if you love where you live, and know that you will not be moving any time soon, then maybe you should more seriously consider buying now.

Is there something else you really want to spend your money on right now? If you’ve been dreaming of a new car, a big vacation or anything along those lines, you should know that you’ll likely have to put those dreams on hold for a while if you buy a home. Your budget will get tighter when you buy a home, and you’ll need to set aside savings for emergency home repairs and unexpected housing-related expenses, so your “extra” money will be reduced, especially during your first few years as a homeowner and you’ll probably have to set aside your dreams of a new fancy car or tropical vacation.

There are of course other considerations, like your future employment/income, savings/budget and whether or not it’s want you are really ready to do. Remember that buying a home can be a great investment; get more tips on the entire process on Twitter @EFXFinanceBlog.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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