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After many years of renting, you finally decided to take it to the next level: you want to be a homeowner. Homeownership for a young professional, however, is a huge responsibility. Before you get there, you’ll encounter taxing to-do’s when buying. The challenge takes on a whole new level when you’re doing this solo. While there’s no doubt that you can pull this off as a strong, independent woman, it’s still important to measure how prepared you are for this big life transition.
Here are some things to ask yourself to know if indeed you’re all set for the challenge:
Can You Buy a Home?
Of course, this has to be on this list — and it should be your first consideration. A property is a big purchase. It may actually be the biggest you’ll make in life. That said, it’s crucial to know if you can afford it. Look at real numbers. Start by pinning down exactly how much you earn a month. Include all your income sources, from your full-time job to part-time gigs, to mutual funds or stocks.
Next, list down the costs. Take note, you’re not only looking at downpayment and closing costs, but if you set aside money for these expenses already, then great. You just need to consider the ongoing costs, such as home insurance, maintenance and repairs, property tax, and of course, the monthly mortgage payment. With figures laid out, the ideal arrangement is that you only spend a maximum of 28 percent of your monthly income on housing expenses.
If you get that sweet spot, then you’re financially prepared to get a new condo or townhouse. If not, don’t leave renting yet and spend some time saving up.
Will You Stay Put in the Next Few Years?
Homeownership is a long-term arrangement. The longer you stay, the more that you can enjoy financial rewards. The property appreciates in value over time. And, you’re able to spread out payments, making it less burdensome. Ultimately, this long-term set up builds equity, which gives you better purchase power. You can renovate your condo with it, finance international travel, or get a second mortgage for property investment. You don’t get to experience that if you’re not planning to stay put.
That said, when switching from renting to buying, consider your long-term plans. Can you envision yourself living in the same neighborhood for the next five years, at the very least? Are you happy with your job? Do you plan to settle down with your significant other anytime soon? You may be ready to move to homeownership. Otherwise, if you plan to move to a different job or explore the world, you’re better off renting.
Where Do You Want to Live?
When you buy a home, you’re essentially putting down roots, so it won’t be easy to just pack your bags the moment you realize you don’t like your noisy neighborhood. In renting, you can do this. In owning a home, it will be a nightmare, both in finances and logistics.
So aside from finances and long-term plans, you should consider the location you’re moving into before buying. In general, a great neighborhood is highly accessible and convenient. It’s a place close to commercial establishments and transportation systems.
Another consideration is safety. Ideally, you want to move into a neighborhood that has a low crime rate. Look up statistics on Google or go visit a local police station to know more. Pay attention to the appearance of the actual neighborhood as well. Abandoned houses and storefronts are not a good sign, as they’re often linked to increased crimes. In contrast, people going out into the streets freely, say, kids walking to and from school or teens biking around the village, are a sign that the location is safe.
Aside from accessibility and safety, you can determine if the location of the home you’re eyeing is able to support your lifestyle preferences. Since you’re a working professional, it’s ideal to find a home near the central business district. If you plan to settle down soon, maybe a neighborhood in exclusive subdivisions is worth considering.
Are you ready to quit renting and start owning a home? Run through these questions, consult people, and go make the switch.