Trying to weigh the risks of buying a home is like evaluating the risk/reward of any other significant investment. But perhaps more so than with other investments, keeping your emotions out of it is hard.
Steps:
- Please find out how much it will cost to buy a house (down payment, mortgage, insurance, and real estate taxes).
- Examine how much you make in comparison to the monthly costs of home ownership. Examine what would happen if one of your two salaries were lost if you relied on them to maintain and pay for the house.
- Compare the tax advantages of owning a home with the expense of renting.
- Think about the reason for your home purchase. If your motivations are just sentimental (“I want my own place”), you might not be able to defend the expense.
Tips:
- If you are struggling to make ends meet when Buying a Home, consider whether you’re overbuying (paying too much for a house given your financial situation).
- Don’t buy a house just because others (peers, parents, co-workers) say you’re supposed to. They don’t have to live with the payments—you do.
Warnings:
Don’t assume you can afford a property by drastically reducing your living expenses. Macaroni and cheese are the only things you can eat.
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