When Should You Start Worrying About Buying A House?

By John Atkins

If you’re a young person, then you're probably already familiar with the fact that younger generations are more hesitant to purchase a home than previous generations.

Times are much different than when your parents were worrying about buying a house for the first time. In the “olden days,” the traditional life plan was set in stone: get married, buy a house, raise a family.

Fortunately (or unfortunately), young people aren’t jumping into homeownership within the same timeline as the generations before did, which is causing a stir amongst the real estate and financial industries.

What’s more bothersome is that many young people are having trouble gauging when they should actually start worrying about becoming a homeowner.

The answer is: it depends.

Figuring out when to buy a house is different for everyone. There is no set age that signals the right time. There are, however, financial and lifestyle signals that will help you make an educated decision on when you should, if at all, purchase a home.

The following is our rough guide to figuring out if homeownership is right for you or if you should continue renting.

Homeownership is Long Term

Purchasing a home is not for everyone. Especially for people who like to move and travel. Unless you’re able to pay for your house outright in cash, then purchasing a home might not be a good idea for someone who has been known to move around frequently.

Lauryn Williams, four-time Olympian and owner of Worth-winning.com, a financial planning company for young professionals and professional athletes, says that millennials love traveling and moving around. Just take a browse through Instagram and count the amount of selfies in exotic locations.

“My tip would be not to buy a home, because it seems to be ‘the next logical’ step in life,” says Williams. “Think about your lifestyle and whether homeownership is truly for you.”

You need to think long term about whether or not you’ll be in the same place that you’re buying your house.

Maybe you don’t travel much, but is your current job security good enough to keep you in one location for more than a few years? What if you get a better job offer that would require you to move?

The traditional career path in America is to graduate school, find a company and stay with that company for your entire life, which is not the case today. Millennials are more likely to switch jobs than previous generations.

“When people are thinking about settling down for five or more years in one location, they should start to seriously think about owning over renting,” says David Reiss, a Professor of Law at Brooklyn Law School.

What’s Your Financial Situation?

Let’s say that you are thinking long term and you will be staying in the same place for the next 5, 10, or 25 years. The next aspect you need to analyze is your financial situation.

Many people within the real estate industry will tell you that renting is much more expensive than owning a home, and they are right to some extent. But that doesn’t mean that everyone should own a house, because not everyone makes enough money to afford the full expenses of a house.

As a homeowner, you’re on the hook if anything breaks. Are you prepared with a sizeable emergency savings account to repair or replace appliances like:

  • Refrigerators

  • Washing Machines and Dryers

  • Plumbing

  • Dishwashers

  • Sprinklers

One of the biggest pros of renting is that you’re not responsible for these appliances if they break or need repair.

It takes years of saving, says Jamal Asskoumi, owner of Castlesmart.com. Many first-time homeowners get too caught up with the down payment and forget about monthly mortgage payments or the additional necessary expenses of a house.

“Most people severely underestimate the money needed for purchasing a house and conveniently overlook the years of saving it will take,” confirms Asskoumi.

It’s important that you figure out how much it will cost to own a house throughout the entire duration. This means you need to make a long-term budget for homeownership.

Michael Kelczewski of Brandywine Fine Properties recommends that first time buyers project five to ten years out.

“As the general rule of thumb to recoup financing charges requires property ownership of 5–10 years,” says Kelczewski.

To figure out your extended budget, it’s important that you take into account how much debt you’re already carrying and where your credit stands.

If you have student loan or credit card debt, you’ll want to come up with a plan for paying that off before taking on the costs of a home. This will help with affording the monthly costs of your mortgage and the general upkeep of your home, not to mention also improving your credit.

Do the Benefits Truly Outweigh the Cons?

Finally, after you assess your long term plans and financial situation, make sure the benefits of homeownership, truly, outweigh the cons.

Thomas Miller, a realtor for Keller Williams Capital Properties, believes this is one of the most important aspects to consider when considering homeownership.

“They should always be able to process the pros and cons of renting versus purchasing,” says Miller. “So they can make the best decision based on their unique situation.”

Final Thoughts

If you can afford a home, then it is a great asset to own. You must be able to afford every aspect of a house, not just the upfront costs.

Finally, when looking for a house make sure you do your research, recommends Steve Udelson, President of Owners.com.

“Buying in a stable or appreciating neighborhood is smart, but it’s important to do your homework before searching for a home,” says Udelson. “Look at up-and-coming neighborhoods or consider a home in a great town that can be fixed up over time.”

There are many different types of houses to purchase, and not all of them will put you into unmanageable debt.

Homeownership is a big responsibility, but it gives some people the security that they need in their lives. Make sure you figure out if homeownership is right for you. Don’t just buy a house, because you think it’s the next thing you need to do.

Written on July 28, 2016

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