by Diane St. James
The decision to buy a home is a no-brainer for some, yet a tough one for many. Are you one of those people who say, as soon as the debts are paid off? Well, guess what! They're never paid off!
* * *
Well, I guess I shouldn't say never, but isn't it funny how once you get your car paid off, the new models are out and well, if you're going to trade it in, now's the time before you get too many miles on it... and before you know it, you have another car payment to make. Now, you're going to wait until that is paid off?
Sometimes you just can't wait until all the debt is paid off, at least if you want to own a home in this lifetime. There are many people who live in apartments or with their parents all their lives. There's nothing wrong with that, although I personally couldn't wait to 'leave the nest.'
So just when is a good time to buy a home? Do you feel you've achieved steady employment? Have you maintained a decent credit history? Do you really desire to own a home? Do you want more space to have to keep clean? How about yard work? Be prepared to have at least a small lawn to maintain, unless you move into a condo where you don't have to maintain any yard or amenities, or move into the city where the only grass you see is a tiny bit creeping up from the cracks between the concrete, no wait, that's a weed! I'm getting off track here, sorry.
The point is, there are things to think about before buying a home other than whether you have enough down payment. Actually down payment isn't really an issue nowadays. Speaking of down payment, many first time homebuyers look at how much they need down and try to figure out whether they can afford (or qualify for) what the mortgage payment will be.
While you're thinking about these things consider everything. Let's start with the mortgage payment itself. You will have to figure on paying principal, interest, taxes and insurance even if you don't have the taxes and insurance escrowed (included) in your payment, you'll owe them. Add in PMI (Private Mortgage Insurance), if you put less than 20% down and did not get one of those combo loans to avoid it. Then if you do get a condo (so you won't have to maintain anything outside the walls of your home), you will have monthly condominium fees to pay. What are these fees? Well, they cover the costs of someone else maintaining what lies outside your walls in the condo project. Since this may include such things as maintaining a pool or ponds, snow removal, etc., these fees are often over $100/mo.
Wait, I'm not done yet! What about the other monthly, quarterly or yearly expenses to owning a house? You may already pay some of these things now if you are renting, but on a smaller scale more than likely.
You will undoubtedly have heating, electric, water, sewer and garbage collection expenses with your new home. If you like watching more than 3 channels clearly on your TV, or if you have kids, you'll be bound to get cable TV. You'll need at least one phone, maybe 2 if there is someone at your house who is constantly on the computer like me. :)
This is not meant to scare you, just make you aware of what to expect. Homeownership can be very rewarding! If you do buy a home with a yard, you can plant an apple tree on it just like grandpa used to have, or have a beautiful flower bed with all your favorite flowers in it.
You can decorate the inside any way you desire, including refinishing rooms or adding new rooms. You can even let your kid pick hot pink with splatters of purple paint for their bedroom walls. You can turn the music up as loud as you want... well low enough the neighbors won't call the cops, and you can turn the heat up as high as you want unregulated!! (I used to live in an apartment where the landlady had control of the heat and kept it at 60 in the winter...brrr!)
The best part of homeownership is just that, Home Ownership! Even though you have a mortgage, you own your home and gradually your mortgage balance will go down and your equity will go up! Eventually, if you stay in your home long enough, you will own it free and clear. It may very well become the most valuable asset you own!
So if you are sitting there, and don't have a huge knot in your stomach, thought about all I've explained, and feel you can buy a home with your eyes wide open... you are ready.
* * *
Return to Budgeting Articles or Buying and Selling Your Home
Copyright © 2001 by Diane St. James. All rights reserved.