“Should I buy a house?” This life-changing question is not something you casually ask the magic eight ball and get hit with a vague answer like, “Concentrate and ask again.” Instead, there is an empirical way to find out if you should buy a house or rent an apartment in Charlotte, NC. Ask yourself these questions below.
Question No. 1: Can I afford a home?
The first step is to find out whether you can buy a house given your current financial situation. A calculator will help you figure out just how much house you can afford. However, a rule of thumb is that you should spend no more than 33% of your income on housing.
Question No. 2: Is it better for me to rent or buy?
The whole “rent or buy?” question depends on which housing market you’re in, because inventory can make a huge difference.
Question No. 3: How long can I stay put?
Generally the longer you live in a home, the smarter it is to buy rather than rent. Short-term stays? Renting might make more sense. The reason: When you buy a home, you’ll pay closing costs that can total thousands of dollars, plus most of your early mortgage payments go toward interest rather than whittling down the principal (the actual amount you owe on your home). As a result, as a rule of thumb, home buyers should plan to stay put at least five years. If you might move before that point, you should stick with renting instead.
Question No. 4: Are my retirement savings on track?
We know, retirement seems a long way off. Still, it’s crucial to start storing those nuts early. So if you’re neglecting your 401(k) to funnel all your funds toward a home purchase that may not be the best allocation of resources (particularly if your employer matches funds, which is free money). Another reason: Setting aside money in a retirement account must be done the year you earn that income; you can’t go back later with a wad of cash and hope to squeeze it in.
When in doubt on what to do, consult a financial adviser who can help you strike a balance between saving for a house and your future simultaneously.
Question No. 5: Am I ready for the responsibility?
With rentals, you can just call your landlord to fix that leaky faucet. With a home you own, it’s all on you. So ask yourself if you’re willing to forgo weekend bar crawls with friends in lieu of mowing the lawn or patching the roof.
Ask yourself the following: “Do I have the time, resources, and desire to take on home maintenance and repairs as well as yard maintenance?”