Is Buying a Home Right for You?


We’ve been pitched on the American Dream for decades – buying a home. Buying a home may not be in the cards for everyone. If you are one of those people, don’t stress over it. Buying a home can be a wonderful feeling, possibly a great investment, and even make you sleep better at night. It can also have the opposite affect for many people.

Buying a home can have multiple effects on your cash flow. To buy a home, you generally need to have a substantial down payment and a really good credit score to qualify for favorable loan terms. If you have both, buying a home could put you in a position where you are paying the same or less than you were paying in rent. The result, however, may mean that you have severely drained your cash savings. This is particularly true if you live in an area with very high housing costs like the San Francisco Bay Area, Seattle, or New York City. Conversely, if you live in an area with affordable rent, your home mortgage may end up costing you more per month than what you pay in rent.


Renters generally have a fixed monthly rent, may be responsible for utilities, and likely have renter’s insurance. These are a renter’s primary fixed costs and planning your monthly expenses is rather predictable and it’s easy to project your annual budget. With a home, you have your mortgage, real estate taxes, homeowner’s insurance, and you are responsible for maintenance. If you live in a cold climate and your HVAC system breaks, you are on the hook for paying to have it fixed. This is especially true if your home is older and not covered by any type of warranty. Keep in mind that your homeowner’s insurance doesn’t cover systems and appliances breaking down.

So, what should you do? How do you decide? First, is to do a self-assessment and see if you might be a candidate for home ownership. You want to primarily consider your overall cash flow and debt picture and make sure you are ready to buy. If you pay your bills in full each month, don’t carry credit card balances, have a strong, stable income and potential earnings ability coupled with the desire to put down roots in your community and enough cash to comfortably close on the home and still have a safety cushion, you are likely a good candidate.

2keys pexels-photo-612800.jpeg

If, however, you are not wanting to stay in your community, plan to move within five years, have a shaky job outlook, and are saddled with more debt than income, or you simply don’t want to be responsible for your own home maintenance, home ownership may not be for you. It’s not for everyone and if you are happier being a renter and sleep better at nigh not being responsible for the care, maintenance, and cost of home, be happy and resolve to rent.

Positive aspects of home ownership can be a sense of security, rising equity, and fixed monthly expenses in a rising cost of living area. Renting, may afford the same aspects (minus building equity) if you live in an area with low-cost housing. Buying into the American Dream is a very individual experience for each person. Take the time to determine if it’s really for you.

As an independent Certified Financial Planner™, I can help you plan for a new home purchase and decide if it fits into your goals.Contact me and let’s talk! #talktometuesday #rentvsbuy #Hireaplanner #tax #realestate #stressfree #homebuyer #savings #equity