As I prepare to move (again), I’ve been thinking about my living arrangements. I prefer renting to buying, since I like living in an apartment or condo community. I like the idea of someone else handling all of the maintenance, and having access to amenities like a community pool and a fitness room. I also prefer communities that are within walking distance of conveniences like groceries, shopping and public transit.
Unfortunately, I might not have the option of renting something I want when I move to a new town. While the cost of living is low, the town I am moving to is lacking in amenities, and there aren’t a lot of choices in the part of town I need to move to. As a result, I am thinking of buying — although it pains me to consider the possibility.
Getting ready to buy means that I need to consider the following 4 things before I pull the trigger:
1. Affordability
The first thing to think about is affordability. How much house can you afford? And it’s not just the principal and interest you need to worry about. Don’t forget about the property taxes, home insurance costs, utility costs, maintenance costs and repair costs. You can use the 30% rule as a starting point to get an idea of what you might be able to afford each month, but you need to be careful with these types of rules of thumb. Be sure that you are comfortable with your monthly cost. I like to keep all of my housing related expenses to 25% of my monthly net income. That leaves me a lot of breathing room — even if it means that I can’t get something big.
2. Other Debt
Part of the affordability equation is debt. Do you have other debt? How much do you have? I’m not uncomfortable buying even though I have student loan debt and a car loan. My payments are affordable, and the interest rates are low. In the case of the student loans, the interest is also tax deductible. However, if you have a lot of high interest credit card debt, saddling yourself with a huge mortgage probably isn’t the best idea. Get rid of some of that debt first.
3. Lifestyle
Once you have a good idea of where you stand financially, you can start thinking about other factors that are likely to influence your buying choice. Lifestyle is a big consideration when you are buying. I like flexibility and freedom, so tying myself down to a home seems like a bad move. On the other hand, I plan to remain in one place for several years, so stability during those six years is a big deal. Buying can provide that.
Other lifestyle considerations include what amenities you like to have, and whether or not you want to take care of maintenance issues yourself. I am looking into buying a condo or twin home. These often have HOAs involved that will at least take care of snow removal and the lawn. Many communities also come with clubhouse amenities that I like. It’s not ideal, but it works when renting isn’t an option for me.
4. Location
Finally, make sure you are happy with the location. My son will need to go to school, so I am buying near the schools he will attend. Additionally, I will be on the side of town closer to my parents and other members of my support system. This is important in my situation. Other considerations might include proximity to dining, entertainment and shopping. I don’t have much of a choice in these areas, and public transit is practically non-existent, so these aren’t considerations for me, although they might be for someone else.
What do you look for when you are shopping around for a home?
{ 0 comments… add one now }