How to find your perfect home

Household 3 min read

Nearly 37 percent of U.S. households today are rentals, the highest percentage since 1965. Is yours one of them?

As more millennials skip homeownership in favor of renting long-term, it can be tough to decide what’s best for you and your family. Before trading your rental for a place all your own, ask yourself these five questions first.

1. Can I afford it?

This isn’t breaking news, but it has to be said: Purchasing a home isn’t cheap. If you’re looking to buy, most mortgage lenders require a down payment of between 3.5 and 20 percent of the home’s price, depending on the sale price and type of lender. If you put down less than 20 percent, you typically need to pony up extra for private mortgage insurance. After the down payment, there are taxes and insurance that add to your mortgage, as well as potential homeowner association dues. Then there are repairs, updates and furnishings to make your new place really feel like home. This shouldn’t scare you, but you need to be aware of how much of your money is going and where. Plenty of sites offer online mortgage calculators, which can help you figure out what your paycheck actually covers.

2. Am I ready for the responsibility?

There’s a level of pride that comes with being a homeowner, but there’s also a lot of responsibility. As a renter, when something breaks, it’s on the landlord to repair or replace it. When the home is yours, the buck starts and stops with you. On average, experts recommend setting aside between 1 and 3 percent of the sale price of your home each year for maintenance. That includes everything from snow removal and lawn care to big-ticket repairs like a leaky roof or busted thermostat. Beyond the costs, you’ll probably find yourself spending a lot more Saturdays gassing up the mower than watching the ballgame on TV. Taking care of your home takes time and attention, but it’s also where that well-deserved pride comes into play.

3. Do I plan to stay more than five years?

Our minds change about every seven years. Do you have dreams of living outside the country, heading to the opposite coast for a new job, or even using your savings to start your own business? If you’re still making big decisions about your future, homeownership might not be worth the effort or the money. Stick to renting instead, and put the money you would have used for a down payment or pricier mortgage payment into a high-yield savings account. When you’re more sure of what you want long term, you’ll still have that money plus interest to buy the home of your dreams.

4. Does it meet my needs?

Few people buy the home of their dreams right off the bat (hence the term “starter home”). But there’s a difference between buying a bigger place in a part of town with good schools where your young family can grow, and trading a cozy rented apartment for an equally cozy house with a mortgage and a lawn to maintain.

If you think you’ll need a four-bedroom in two years, don’t settle for a two- or three-bedroom house now. Find a slightly bigger place to rent and bank as much money as possible, so you can purchase a home that won’t have you bursting at the seams almost immediately. It also helps to consider other long-term desires, like space to add a finished basement. You might not be able to afford it all now, but if the potential is there, you’ll buy yourself time to save the money you need.

5. Is now the right time to buy?

Try to remember the early 2000s, when the housing market was a buyer’s dream. Then remember the crash of 2008. If you can’t remember, read up on it—it’s a cautionary tale worth knowing. The takeaway? The real estate market balloons, and then it bursts.

Before getting a loan, consider where interest rates are now and where they’re headed. Even a small change in rates can significantly affect how much interest you pay over the life of your mortgage loan. There’s also the issue of quantity. Even if lending rates are right where you need them to be, you could wind up paying more for your home because everyone else wants to buy, too. Your best bet is to talk to impartial real estate professionals who can help you decide when the market is most in your favor.

There’s a lot to consider when deciding whether to buy or rent your home. What shouldn’t require much consideration is whether to buy life insurance. Whether you buy a home or continue renting, life insurance helps make sure your family isn’t stuck with unaffordable expenses, like a mortgage, if something happens to you. And that’s good news, no matter where you call home.

*Disclaimer: In the spirit of transparency, this blog post is for informational purposes only. We know how quickly things change, so we can’t guarantee the content and links to unaffiliated parties are up to date.

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