Do you want to buy?
When it comes to buying a home, many people are simply unaware they can even
buy a home. They just presume they can’t qualify for a mortgage, whether it’s because
they:
Feel they don’t earn enough money
Feel they don’t have a good enough credit score, or
Simply feel like they aren’t “worthy” of buying a home.
So, a lot of people don’t even bother to find out for sure.
They say “ignorance is bliss,” it isn’t always. While the fear of not being approved
is understandable, it can cause someone who can easily qualify for a mortgage to not
buy a home as soon as they’d like to...or even ever, in some cases.
Plenty of people who thought they wouldn’t qualify for a mortgage actually do qualify —
and have tons of options to boot. Of course, not all people qualify for a mortgage. But
at least once they find out why they don’t qualify, they can work on getting qualified in
the near future.
So, if the main reason you’ve avoided buying a home is because you presume you won’t qualify for a mortgage, find out if that’s even true. Contact a lender to get pre approved.
You may be pleasantly surprised. In the least, you’ll walk away with a clear
understanding of what you need to do in order to qualify in the near future.
The Down
Many people claim that the best way to save for retirement, a down payment on a
house, or simply just to become wealthy is to stop buying a pricey latte every day.
Well, it can’t hurt, I guess. It’ll certainly add up over time if you don’t blow $5 - $10 a day
on lattes, lagers, Legos, or whatever else makes your day worth living. But it certainly
isn’t easy or appealing for most people.
So here’s a different perspective…
Socking away money for your down payment — at the expense of your daily pleasures
— might not actually make the most sense.
Don’t get me wrong, you do need a down payment. But you might not need to save as
much as you think.
A lot of people still think they need a 20% down payment in order to buy a house. The
reality is that very few people are actually required to put down 20%. Many buyers can
qualify to put down much less. Some mortgage programs only require as low as 3.5%
down.
On the flip side, having a larger down payment can help you in some ways:
It can get you a better mortgage rate.
It gives you more equity in the house you buy.
It can lower your monthly payments.
It means you’ll pay less interest over time since you’re borrowing less.
Obviously, everyone’s financial situation is different. There’s no one-size-fits-all answer
to this. A low down payment may or may not be the wisest way to go for you.
However, since forgoing a latte a day isn’t going to do much in the short term, it might
make more sense to buy a house with a lower down payment. That way you can start
building equity sooner. This might be a better solution to increasing your wealth —
without having to live a latte-less life.
Keep your money.
Remember, you don’t need to tie up all of your available money in the
purchase of a house. You can get a mortgage with a low down payment and keep the
rest liquid or invested elsewhere.
Here’s some food for thought: Instead of tying up money to put 20% down, consider
buying a house and put down about as much as you would have tied up in a rental with
your first and last month’s rent and security deposit.
You’re going to have money tied up in your housing one way or another, so it may as
well be tied up with you rather than someone else.
No matter what you decide, just give some objective thought as to whether or not your
desire to have your money liquid is for a better reason than buying a house...and not
just because it’s a natural human desire many people have.
Reality
So, if you hesitate to buy your own home because you’re concerned about owning a
potential “money pit,” you’re just being sensible and thoughtful. Too many people get
carried away thinking they can just buy This, That, Or Another Old House and “Bob Vila”
it into perfection. Some people can and do. But it’s not something everyone should take
on.
If you’re concerned about buying yourself a “money pit,” there are solutions:
Buy a condo. You’re responsible for less of the maintenance and upkeep.
Buy a house that has been recently renovated...especially if they did the major
mechanical and operational elements of the house, not just a pretty paint job.
Buy a home warranty. This will cover you if something breaks and needs to be
repaired or replaced.Set aside some money for repairs and replacement costs.
Owning a home does come with the responsibility of maintaining it, so you’re smart to
take it into consideration. But as long as you make a good decision on what you buy, it
probably won’t be the proverbial “money pit.”
Make the Time to Make It Happen
Life can get pretty busy. There’s hardly enough time in a day, a week, a month, or a year
to do everything we want and need to do.
And buying a home isn’t something you can just ride on over to a dealership or two,
kick a few tires, play some hardball, do some paperwork, and ride away into the night
like you can with a car.
Buying a house is a longer process, so it’s probably not the best thing to try and do in a
rush. You want to make sure you make a thorough, thoughtful, and educated decision.
But if you find a good real estate agent to work with, you can cut down on a lot of the
time, work, and effort on your end.
And while the process may take longer than buying a car, it isn’t like you have to spend
hours and hours and days and days at a time on it. It’s more of a here-and-there type of
thing. Much of what needs to get done is accomplished by professionals working on
things behind the scenes.
So, if your main concern is that it’s going to be a huge time suck, it doesn’t have to be.
You just need to be able to delegate and trust others to take care of a lot of the details
once you’ve found the house you want.
Call Me!
So, if you’re on the fence about buying versus renting, don’t feel like you have to wrestle
with it on your own. Just make sure you find an agent you can truly trust to help you
assess whether or not buying or renting makes sense for you. A great agent isn’t going
to cost you a penny to help you make an objective decision, and he or she isn’t going to
push you one way or the other.
