Is A House Right For You?

Is A House Right For You?

Hey everyone! Happy Monday. I want to say thank you to everyone who left a comment on my post the other day about what percentage housing expenses are relative to your income.

I received a lot of great responses and hopefully it will help people determine if a house is right for them or not. So many people don’t realize that there is more to a house payment besides just the actual payment (mortgage, insurance, taxes, maintenance, etc.).

It seems like a hot topic in the personal finance community is whether a person should rent or buy a home. What if you’re not sure if a house is even right for you? Maybe an apartment would be better? There are many factors to think about before you buy a home.

When we were in the process of buying our first home, there were a lot of things to factor in. Yes, we were really young when we bought our house, we were 20 years old. Now, I don’t know if I would recommend buying this young for others. It has worked out for us, but we had to overcome many hurdles in order to get where we are.

We lived together for a couple of years before we decided to buy. We knew apartments weren’t for us (we have a big dog that we could never get rid of because she is my baby, and I lived in apartments nearly my whole life due to us constantly moving for my dad’s job).

My dad also preferred apartments/condos over a house with a yard because there were amenities (such as swimming pools and tennis courts) and he didn’t have to upkeep anything besides what was actually in the apartment. He enjoyed how carefree it was.

Also, W and I had rented a house together, and we knew what it was like to live in a house together. I knew for a fact that I did not want to live in an apartment or a condo. There is nothing wrong with condo living, different people enjoy different things.

Before we bought, I was tired of having no yard my whole life and something that wasn’t “mine.” I have moved a ton (when I was younger I went to a grand total of about 12 different schools), and I just wanted to stay put.

We knew we wanted a house, and the fact that houses were only slightly more expensive in our area definitely appealed to us.

However, we never really thought about how we would feel stuck if we bought a house. We were definitely thinking in the moment when we bought our house. We love our house of course, but I constantly wonder if I would be parading around the world if I didn’t have a house and so much STUFF.

Dreams of traveling extensively while we are young have definitely vanished due to us having to pay my mortgage. Oh well, that’s just the responsibility of growing up! I do love being a homeowner though.

Below are some questions to ask yourself before you buy:

 

Do you have a reliable income?

Buying a house means that you will have a constant bill to pay (your mortgage payment of course). So a reliable job and income is definitely needed. If you are freelancing, you will want to make sure that you will have enough to pay your mortgage along with any surprise expenses that may pop up.

Of course, the same could be said about having an apartment as well. An income is needed wherever you decide to live.

 

How long do you plan on living there?

If you plan on having kids and still staying the same house, then you definitely want to keep that in mind. However, if it’s just going to be 2 people in the house for a while, then do you really need a 3,500 square foot house?

Also, the general rule is that if you think that you will be living in the house for less than 5 years, that you should just rent instead. The costs of selling before 5 years usually outweigh renting. You will have many costs to pay if you sell, such as closing costs, realtor expenses, repairs, etc.

 

Do you plan on/want to travel?

This is one reason why we regret buying a house (but we still do love having it). Being able to travel for a long period of time is not possible, because we do have to think about how we are going to pay our mortgage payment every month and I’m a paranoid person so I would be afraid of squatters ruining the house if we cannot find a reliable house-sitter.

However, I do plan on making the switch to self-employment soon and traveling at the same time, and we will be keeping the house. We will just have to make it work!

 

Do you plan on moving a lot?

If you have a job/career that will require you to move a lot, then home ownership may not be for you. If you are moving every year, then home ownership will be way too expensive to justify the costs.

 

Is your credit good or great?

Yes, I realize that a lot of people view mortgages as the devil, but for most, owning a house without starting with a mortgage is near impossible. A better credit score (read my post on building credit) leads to a better interest rate, and therefore of course, a lower mortgage payment.

Also, a low credit score will lead you to not even being approved. Get approved before you start looking so that you’re not let down. No one wants to fall in love with a house only to find out that they can’t get approved for it.

 

Do you have enough for a down payment?

We didn’t put down as much as we would’ve liked, and therefore, we have to pay PMI. For our next house I plan on putting a substantial amount down or paying in cash. PMI is so much money every month and I would rather not pay it. Getting home loans without PMI is always great!

 

What other tips do you have for someone thinking about buying a house?

Do you prefer to buy or rent?

 

 

Comments

  1. Nell @ The Million Dollar Diva says

    Really interesting post Michelle. I actually wrote a post last week about my decision not to buy a house when I was thinking about it in my early 20s and your post touched on a lot of the reasons that I decided not to – namely, wanting to travel and not stay in the same area for too long.

    My post is here themilliondollardiva.com/buying-home-bad-investment-australian-dream if you wanted to have a read of it. I’d be interested in your perspective. I guess that ultimately the decision to buy a house is an emotional one – wanting to have a place to settle down. I can see why you’d want that, having moved around so much.

  2. Canadian Budget Binder says

    Hey,
    Like you I bought my first home at 21 but I was single and it was challenging especially to someone like me who thought I was a saver and not a spender. I knew most of what I needed but I was still young and with experience I am confident to say that I was not as prepared as I thought I was. You bring up many good tips here and for those who are on the fence all I can say is do your homework.
    CBB

  3. Thomas | Your Daily Finance says

    We enjoy having our house. That being said you need to plan for the unknown. Even when buying the home a lot of expenses can arise that are more than just the down payments. We live in a flood zone and near great schools so we pay more than a lot of our friends for the location. One tip I have is figure out what works for you and what you want. I know this seems simple but a lot of people want a house because everyone else has or wants one. Nothing wrong with an apartment if your plans are to move around the country or travel the world. Do what works for you.

  4. Alexa says

    I am definitely a house person. I have lived in the country with a huge yard my entire life and I couldn’t imagine anything different. I’m not a city girl so apartment and condo living just aren’t for me. I want to buy a house but I’ve made a pact with myself to be completely responsible. I will have my emergency fund and a 20% down payment in place before I begin to look. Luckily housing is pretty cheap in my area so the possibility of buying a home could definitely be in the next couple of years!

  5. kelly @stayingonbudget says

    Great post! Yes, the other thing to consider is how much a fixer-upper do you want? I have a house that was vacant for two years and there is a ton of work. It’s not for everyone. If you like things done, to travel, or don’t like getting neck high into house projects, this isn’t for you. There are various degrees of updating–from cosmetic to major updates. All houses require maintenance and the degree of maintenance will depend on the age and how it was taken care of prior to you owning it.

    • Michelle says

      Yes, there can definitely be a lot of maintenance when you own a house. Even brand new houses need maintenance and a lot of people don’t realize that.

  6. DC @ Young Adult Money says

    I would say another thing that young adults in particular need to think about is how much time they are willing to devote to their house. When you live in an apartment, the most effort you have to make on upkeep is to bug the office to send a maintenance guy. Tub drain not working properly? Put in an order and it’s fixed the next day (if you live at an apartment). On the flip side, if you own a house you will have to research contractors or figure out how to DIY. There’s pretty much always something MORE you can do, whether it’s cleaning or learning more DIY ways to improve the space.

  7. GamingYourFinances says

    There’s a certain “pride of ownership” that comes with owning a house. We love to do our own renovations and improvements to make our house exactly how we want it, that’s not possible in a rental. We also were committed to living in one place for a while. As you say Michelle, it’s very important to make sure you’ll stay put for more than 5yrs, otherwise real estate fees will eat you alive!

  8. Holly@ClubThrifty says

    We live in such a low cost area that it doesn’t make much sense to rent unless you can’t afford to buy for some reason. Renting probably costs around 30 percent more than buying in my area!
    I personally like to own property vs. renting because I want to be able to do anything I want with it.
    Holly@ClubThrifty recently posted..Get Rich Quick? Not So FastMy Profile

  9. Alicia @ Financial Diffraction says

    All great points regarding the finances. I think something that we found out while being townhouse condo owners (not responsible for outside maintenance, but inside we were) was that we have no real “handy-skills”. I am a quick learner and have tried my hand at many small repairs, but there are some things that I am scared to touch (i.e. plumbing/electrical). It seems the way of the all around handy-man (like my Dad who is 63 and can fix most anything properly) is gone like my parents generation because many people are so used to a disposable lifestyle.
    Alicia @ Financial Diffraction recently posted..being a wedding guest is expensive.My Profile

  10. Mrs PoP says

    We rented before we were ready to be in the same area for a while and then ought when we were ready. We like being homeowners, but get that it’s kit for everyone and some people are like your dad and like the hands off life of renting.

  11. Budget and the Beach says

    I rent because of the high cost of homes in LA. I was almost ready to buy in Seattle when I lived there and had a stable job, but I didn’t feel emotionally ready. I just read an article yesterday that more people in LA are renting because people are getting outbid on homes (someone bid 59k over the asking price on a house) and the process is really frustrating.

  12. Ann says

    After reading all of the questions you pose, it seems like I am in good shape to buy a home, which is currently our goal right now, but I am still somewhat hesitant. We are currently paying close to what we would be paying on a mortgage on renting an apartment and with a baby on the way it would be so much nicer to be a home owner, but then the added stresses of owning a home is what I am uncertain about. Because the baby isn’t here yet, I don’t really have the perfect idea of what our finances will look like in a few months. Besides that, child care is so much, I’m not sure if I really want to add a mortgage onto that? But like I said, what I’m currently paying in rent is basically the same, so I don’t even know if it really makes a difference.
    Ann recently posted..Exact Breakdown of my Current DebtsMy Profile

  13. My Money Design says

    I will always maintain that on average buying a house is better than renting. Your house is the only asset you own that you can physically live inside and use, and it generally appreciates unlike a car, appliance, tool, etc. Though times have been tough for housing recently, they have the power to make a comeback and things will continue to grow again someday (hopefully at a reasonable pace this time).
    My Money Design recently posted..Recognizing Opportunities to Build Multiple Streams of IncomeMy Profile

  14. Nick (@ayoungpro) says

    As you briefly mentioned, one of the things people overlook with houses is the cost of the “extra” expenses. If you are thinking about buying a house, it is a good idea to try to estimate things like taxes, utilities, maintenance, etc., and figure those into your monthly bill.

  15. Marisa says

    Hello,
    hope your having a great Monday,well I never have bought a house,but maybe some day I will I live with my parents and I see that its a hard thing to pay maybe cause my dad is the only one working,but maybe in my opinion if some day I consider myself to buy a house I would check also if we will have good neighbors because our next door neighbors there kind of mean people :( we always hear them screaming to each other and they sometimes scream at our children when they are playing at our back yard saying not to scream or make loud noises thats why I’ll check that also before buying a house the neighbors and thanks for all your informaton it really help have a geat week

    • Michelle says

      Thanks Marisa! I hope you’re having a great Monday as well :)

      Yes, definitely drive by the house multiple times to see how the neighbors and neighborhood are! That’s always a great idea.

  16. Romona @Monasez says

    I want a house but I know it wouldn’t fit into the lifestyle I want to live. My goal is to live in the city and travel as much as possible. Plus, I’m single so its only me and I don’t think I would be able to keep up on the maintenance of the house unless I spent money for a contractor to come out every time something breaks. I want to have the proud feeling of owning a house so I want to get an investment property that way I’ll have a house and I can make some money at the same time. Great information. Thanks for sharing!
    Romona @Monasez recently posted..How to be eco-friendly affordablyMy Profile

  17. Shannon @ The Heavy Purse says

    We’re homeowners and it was the right choice for us. But you are absolutely right that you have to make sure it makes the most sense for you and your lifestyle. There is so much expectation that you have to become a homeowner. I’ve seen people buy homes under that premise who really weren’t ready for the either the responsibility of homeownership or their lifestyle really didn’t lend itself to upkeep, etc.
    Shannon @ The Heavy Purse recently posted..Money Tips to Help You Survive and Thrive in CollegeMy Profile

  18. Rachel says

    Ultimately, buying a home was the best choice for us. It hurt to make a really high rent payment every month for the apartment we lived in, when we knew what we could get in the way of a house for that same amount as a mortgage payment. We bought at 23 in an ideal location for both of our jobs, but also one that made sense for either of us accepting a different position in the same metro area. Sometimes I miss the carefree aspect of 24-hour maintenance. snow plowing and lawn mowing, but ultimately owning is the best choice for us where and when we are in our careers and our marriage.

    We have friends who bought before they were truly ready and are unhappy with their home, which is heart breaking. We’ve also watched friends, who didn’t consider every aspect of owning a home and only looked at rent v. mortgage payment, not utilities, moving, up-keep and their debt and they were emotionally crushed when they couldn’t buy a house they fell in love with.

    • Michelle says

      Yes! For us, the positives greatly outweigh any negatives of home ownership.

      And I also know of many people who are unhappy and did not fully think about everything.

  19. Miss Entrepreneurette says

    We do own a house. We bought it in 2011, a few months before our wedding. We love everything about it, except for the feeling stuck. Long term travel is just not an option for us right now because we have so many pets and I just couldn’t leave them for more than a week or two. But we do feel stuck in this town we moved to on occasion since we don’t know anyone here. It’s much more conservative and pretty far from any real stores (ok, Target. I just miss Target. and Trader Joes) but other than that we love owning our home. We had lived in a few apartments together, but I’ve always lived in a house and we both knew we needed outdoor space or we’d feel cramped long term. Plus with dogs, it’s needed. We were 24 and 25, still pretty young for buying a house. Especially since we come from southern California, out of all of our friends we were the first to buy a house and since then only one other couple has. Everyone else either rents or lives at home because the cost of living in the LA area is nuts.

    I wish we had more to put down too, PMI is SO much every month in comparison to what our mortgage would be. But we were casually looking for a house and the price on this one just keep dropping and dropping until we finally decided it would be foolish not to buy it.

  20. The Norwegian Girl says

    We´re renting, but we would love to buy our own apartment. The reason for apartment, is simply because it´s too expensive to buy a house in Oslo, but an apartment would be a good first step into real estate. We´re planning on buying an apartment hopefully within 2 years, and live there until we´re “done” with living in the big city and then move to the countryside where we can buy a big house for the same amount as an apartment. I guess the main reason we don´t really like renting is because it feels like a waste of money.
    The Norwegian Girl recently posted..Thoughts about being financially punished for being illMy Profile

  21. Tammy R says

    I think I’ve convinced myself that I love my townhome. I actually do, but we have talked many, many times about it not having been necessary to own. I would not want a free-standing home (cannot stand yard work or imagine paying someone else to do it). I think if I could rewind ten years, I’d rent. We would have been better off investing that money and paying down debt!

  22. Tara @ Streets Ahead Living says

    Renting is definitely not my preferred method of housing but in my current situation, houses are so outrageously priced that renting is the only option. In a few years we hope to move to a much more affordable area (with jobs) so that we can eventually buy.

  23. Kelsie says

    We bought our house because in our area it’s cheaper to buy than to rent. We should have it paid off within a year, which will make me love our house even more. But, I still miss having someone to do the yard work and fix leaky faucets.

  24. E.M. says

    Good points to consider. As of right now, we are renting because my boyfriend’s job will likely have him transferring a decent amount over the next few years. We would like to travel and see more of the US, so this doesn’t bother us at all. We’re nowhere near ready to settle down anyway! The costs of owning a home are a little daunting right now.
    E.M. recently posted..Two Sides: Car Accident EditionMy Profile

  25. Michael says

    For me, I’m content to rent. I know I’m “wasting” money buy not investing into something that will earn equity, but personally, I don’t want to pay school taxes or property taxes. I prefer to have maintenance taken care of by someone else. For me, renting is easier. Someday I want a condo/townhouse, and I know I’ll have taxes then, but the idea of having a whole house doesn’t entirely appeal to me.

  26. TB at BlueCollarWorkman. says

    Great questions. My wife and I bought a house when we were about 23 or so. We knew we wouldn’t want to move again, we just wanted to get a little house, pay it off, and live their until we’re old and wrinkly. And so far, that’s what we’re doing :-) I think some people are really scared of buying houses, and while I think it should be thought through, people shouldn’t forget that when our parents were younger and ouru grandparents, they were doing “grown up” things a lot sooner than us. Having kids, getting jobs, having a home… don’t be afraid. Think it thorugh of course, but don’t be afriad.
    TB at BlueCollarWorkman. recently posted..Why Criminals Go Back to Jail Again and AgainMy Profile

  27. SavvyFinancialLatina says

    We have lived in apartments and are so ready to move out. We want a house with a big yard so there’s space between our neighbors, and a bigger space. We have outgrown our 700 sq. foot apartment, and it’s hard to have family or friends over. We have no place to put them.

  28. Laurie @thefrugalfarmer says

    Wow, 12 schools is a lot, Michelle – that must’ve been kinda tough. We prefer to own ourselves, but I can see more and more how people would want to rent, simply due to the lack of responsibility. It does make sense to rent for a lot of people.

  29. Michelle says

    I bought my first home (that I’m still in) in 2007. I did it the completely wrong way but lucked out (fool’s luck!) Fortunately, despite my mistake: zero down. I managed to buy a tiny place in an amazing location for basically nothing! I am accelerating my payments as we speak. I really love my place :)

  30. Martin says

    I’m both! I own a place which I rent out for a high price. Then I rent a place with my cousins where, well, things are wild!

    Btw, you really bought a house with a partner at 20? That’s insane.

  31. Crystal says

    We bought our first home when we were 23. We bought our second home when we were 29, paid off the first one this year, and rent out the first one now that we moved. In our area (outside of Houston, TX), if you have great credit, buy. It’s simply cheaper than renting even with maintenance and taxes. For example, on that first house when we first bought it (before we paid it off, so we still had the mortgage), it was $740 for the mortgage, $250 a month in taxes and insurances, and $100 a month for maintenance stuff on average. That’s $1100 a month at it’s absolute most expensive. It rents for $1200-$1300 a month easily. It was claimed as a rental about a month before we actually moved out.
    Crystal recently posted..Hey Whiners, Bite Me!My Profile

  32. Sarah @ The Wanderblogger says

    I have to laugh a little because I am exactly the person you’re talking about who should NEVER buy a house! We’ve bought and sold three homes since 2007. I don’t even want to think about all the money we’ve lost from buying homes and then moving 2 years later. I have resolved to be a permanent renter until I’m 70!

  33. Sarah @ The Wanderblogger says

    I have to laugh because I am exactly the person you talk about who should NOT buy a house! We have bought and sold three homes since 2007. I don’t even want to think about all the money we’ve lost from buying a home and then reselling it two years later. I have resolved to be a permanent renter until I’m 70! :o)

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