Is it Time to Buy a Home? Purchasing a place of residence will probably be one of the most important financial decisions you will ever make—especially since you will be acquiring more debt while increasing your day-to-day living expenses. So let’s explore some of the options and considerations that you will need to address before making a decision.
Condominiums. A condominium is similar to a house from a financial perspective since you will generally have a mortgage and pay taxes on the property. But unlike a home, it often takes on the form of an apartment or a similar shared complex. And unlike a house, you will pay a monthly maintenance fee (a.k.a. HOA fees) that covers landscaping services, painting, and other exterior projects. You are still responsible, however, for interior repairs and maintenance. Before you make any decisions, be sure to read the condo agreement carefully as these documents will also provide the do’s and don’ts of condo living such as what types of vehicles can be parked in your driveway or if pets are welcome.
Co-ops. Housing cooperatives are often less expensive than apartments because they operate on an at-cost basis, collecting money from residents to pay outstanding bills. In areas where the cost of living is high, such as New York City, co-ops may be an attractive option from a financial perspective. In a co-op, you’re a renter, but you’re also part of a group that serves as a landlord. In fact, you actually buy into the cooperative/association. Be sure to read the co-op’s articles of incorporation, bylaws, subscription agreement, and any other available documentation to fully understand how the partnership works, including how it is managed and what you are financially responsible for.
A Home. If you like your privacy and independence, purchasing a single-family residence might be the right choice for you. If you purchase a newly built home, be sure to figure in the cost of upgrades and landscaping, which aren’t usually included in the base price. If you are handy, a previously owned or fixer-upper may allow you to purchase more home for your money and will generally increase in value as you upgrade it. Additionally, consider how much living space, outdoor space, bedrooms, and bathrooms you will require. In the end, try to limit the size of your home based upon these requirements to avoid purchasing too much house.
Other Considerations. Aside from trying to determine the type of property that best fits your budget and needs, there are many other factors to consider.
For instance, if you don’t currently have a family, do you plan to in the near future? Are you handy and capable of keeping up with the maintenance? What about the location and its impact on your commute? Have you thought about the type of neighborhood you’d like to live in or the school system? In other words, you don’t want to purchase a piece of property, only to find out in a few years that you have outgrown it—or it doesn’t fit your life style. You also want to avoid sinking into debt by overextending yourself financially.
No matter what your motivation is for purchasing a home, plan carefully to avoid unwanted surprises or debt. If you do, you’ll be better prepared to enjoy your home sweet home.
Visit Consumer Affairs for more information about purchasing a home.