Even if it is part of the "American Dream", is owning a home your dream right now? Or are there some considerations, whether financial or personal that may make later a better time to be a homeowner, or even not at all (see budgeting-help.com for articles on the benefits and costs of homeownership)?

Here are some questions you can ask yourself before taking the leap:

1. Even if you have the cash and credit to buy a home, are you "mentally prepared" to be a homeowner?

2. If you can afford your mortgage right now, have you accounted for the other expenses you will have to pay to be a property owner, including property taxes, homeowner's insurance, or maintenance costs? Have you also set aside at least 6 months of mortgage payments?

3. Although you will not have to answer to a landlord or property manager in the home you buy, it is just you now----you have to manage all aspects of the home. Are you prepared to be your own landlord and property manager?

4. Do you really want to live in that home or in that area for an extended period of time? Does the local area meet your needs sufficiently?

5. Even if people move from their homes or purchase something new every 5-7 years, do you really want to stay in the home you want to buy right now for even that time?

6. Are you willing to keep the place even if you don't see any financial returns or increased equity? What about when the tax benefits diminish?

7. Would you still love the home and the area if your property decreased in value?

8. Are you willing to stay in that area or keep the home, even if there are job opportunities elsewhere? Do you know what you'll do with the property you just bought if you need to leave?

9. An inexpensive rental market compared to homeownership costs may affect your decision to buy in two ways. First, if you buy, you'll be paying more than you would have as a renter. Additionally, if you rent out your home in order to buy a new property or move to a different area, you'll have difficulty finding tenants and end up "feeding" the property (paying into a property you don't live in). What if renting is cheaper than buying?

Answer these questions honestly before committing to homeownership. If you still want your first home or condominium that is all your own, please see "The Two Sides of Homeownership" to learn about the home selection and lending aspects of purchasing a home.


References:

Neighbor Works America. Realizing The American Dream

Neighbor Works America. Realizing The American Dream

Federal Deposit Insurance Corporation. An Update on Emerging Issues in Banking

Federal Reserve Bank OF San Francisco. Innovations in Mortgage Markets and increased Spending on Housing

Freddie Mac. Don't Borrow Trouble

Federal Trade Commission. FTC Consumer Alert

Credit Union National Association. News Now

Freddie Mac. Buying and Owning a Home