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Buying a home is a huge accomplishment, but it’s also a huge responsibility. It’s important to understand all the pros and cons of homeownership when you decide it’s time to take the plunge and stop renting.
Sometimes, even after you feel like you have enough saved for a down payment, the decision to buy isn’t always so easy to make, and you may find yourself wondering if you should put off homeownership for a little while longer.
First of all, it can be a big financial commitment. Many financial advisors recommend you aim to stick with the 28% rule: your mortgage payment (including principal, interest, taxes and fees) should amount to no more than 28% of your gross monthly income.
And after you make the initial down payment, ideally you’ll have something leftover for repairs, upgrades and furniture among other expenses. It can all add up very quickly, and if you’re not careful, you can end up feeling house rich but cash poor.
Of course, cost is important when making the decision to rent or buy, but financial advisor Sheryl Garrett argues that your flexibility should also be top of mind. Here’s why.
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“If there are any ifs, ands or buts, you aren’t committed to buying.”
It’s important to understand how much of a commitment buying a home can really be. Not only are you paying a mortgage, but you’re also responsible for any home repairs, maintaining the property, paying property taxes and home owners’ insurance and more. In fact, according to a Bankrate survey, 21% of millennials regretted buying a home because maintenance costs were too high.
The mortgage application process is a commitment in and of itself. Typically, you’ll need to get pre-qualified for a loan before you even start looking at homes. And after your offer is accepted, it can take months to wrap up the process, during which time you’ll need to be extra careful to maintain your credit score and avoid spending large sums of money until you close on the property.
It’s hard to ever feel 100% ready to be a homeowner, and sometimes taking a risk even when you’re intimidated can really pay off. But if you feel nervous about the long-term financial commitment, you may not be ready to buy a home.</…….