Thinking about buying a home? It's time to start making one of the most important pro-con list of your life.
Ask yourself if this is a priority
How important is owning a home to you? Is it something you're thinking of doing just because you've reached a certain age or is it an important part of your plans for the future? It's a big decision and it's completely okay to say that you just don't care about owning a home. Instead, think about what it would take to get you excited about owning a home. Maybe it's not a priority, but you'd fill out your loan application today if it meant you'd be better off financially in the long run.
If you have a partner who's making the decision with you, be sure to ask them what's important to them. The last thing you need is to start the process only to find out your partner would really like to move to a different state in a few years!
Find out if it's a good investment
We always think about owning a home as a great investment. But recent studies have shown that's not always the case. In fact, some experts are saying you can become wealthier by renting than you can by owning a home. The catch? You have to be investing the money you would otherwise spend on a down payment.
Not everyone is disciplined enough to make investing a priority, so now's the time to be honest with yourself about which category you'd fall into. If you don't think you'd be disciplined enough to invest, then owning a home might be a much better way for you to build wealth.
First-time homebuying tip: You've heard a home is a good investment. Here's how it can help you build wealth.
Think about your lifestyle
Even if all the other factors are telling you now is a good time to buy a house, you still need to think about your current lifestyle. Maybe you don't want to be responsible for home repairs and maintenance. Or you might be hoping for a big promotion at work in the next few years—one that would mean you'd have to move to the corporate headquarters in a different city.
If you're confident you want to stay where you are for the next five or so years and you're ready to take on the responsibilities of homeownership, then it might be time for you to start looking for your first home!
First-time homebuying tip: Thinking about relocating for work? Here's what expenses your employer should cover.
Evaluate your financial health
Buying something you can't afford is never a good idea. When that thing is a home that costs hundreds of thousands of dollars, it's a recipe for disaster. Before you start looking for your cute starter home, you need to make sure you can afford the down payment, closing costs, and monthly payments.
This is a great time to look to the future, too. Is your income reliable enough that you'll be able to make your monthly mortgage payments? Will you be able to save enough for an emergency fund to cover any major repairs, like a leak in your roof or an A/C unit that needs to be replaced?
First-time homebuying tip: How do you stay in your budget when you're buying a home? Start with our calculator to see how much home you can afford.
Learn about the housing market
Buying a home might be the American dream, but that definitely doesn't mean it's the norm everywhere. Take San Francisco or New York City, a lot of people living in those cities rent for all or most of their lives because buying property is just too expensive. Cities like that are typically in what is called a seller's market. There are fewer homes for sale than there are people who want to buy them, so sellers can charge more for there homes because they'll usually have multiple buyers putting offers in on their homes.
In other parts of the country, there might be a buyer's market. That's when there are a lot of homes for sale, but not a lot of people wanting to buy them. That's great if you're a first-time buyer because you can usually buy a home at a great price without having to worry about selling an existing home.
Now's a great time to get to know the housing market both nationally and in your area. That information will help you decide if buying now makes sense, if you want to look further out from the city center, or if buying just isn't for you.
First-time homebuying tip: Can't afford to buy in your city? Here's why your second home might be the first one you own.
Up next: Finance tips for first-time buyers
You've decided to take the plunge! Now it's time to make sure your finances are in order. Get our finance tips for first-time home buyers.