How do you determine if you can buy a house?
Owning a home is a gigantic milestone in our lives. It’s not a decision that should be taken lightly as it is a huge financial commitment, and locks you into a specific neighborhood (renting always keeps your options open). If you think you’re ready to buy, there are a few things to keep in mind to make sure it’s the right time.
First, you’ll want to make sure that your financial situation is very solid. You should have savings and retirement accounts with plenty in the bank, plus the 10-20% needed for a down payment. Just as important as the financial commitment is your commitment to being in one place. In this economy it’s hard to predict how stable your job will be in the years to come, but it’s something to consider.
At the very least, it’s good to aim for your home purchase to be close to a central area of job opportunities. This is easier in a location like New York or Chicago, where there is one central city location that most people commute to for work. In this situation, you simply buy a home with a reasonable commute to the city, and can have some peace of mind that if your employment situation changes, you will be able to get your next job in the same place. This is less viable in an area like Southern California, where there is no central city, and job opportunities sprawl from San Diego to Los Angeles.
You’ll also want to factor in other financial issues, like taxes and overall costs of owning. With the right preparation in place, you can make sure this big decision is the right one to make.