Can you imagine the impact that could have on your down payment or monthly mortgage? In fact, if you invest it at 10%, after 10 years, you’ll have a million dollars!
Why should an achievement meant to bring joy become a burden?
Sadly, that’s the reality of many people whose decision to get on the property ladder is literally keeping them up at night.
According to several reports, many homeowners are unhappy with their decision. In fact, this article by cnbc revealed that 72% of recent homeowners have regrets about their purchases.
They face various challenges and difficulties they didn’t anticipate before buying their house.
What makes things particularly painful is that, with a little more patience or research, they would have done things differently.
Buying a home is a big decision, and perhaps, the biggest financial commitment for most people.
So, you really want to get it right.
If you’re in the process of buying a home and don’t want to regret your decision down the road, here are four questions you need to answer, before signing on the dotted line.
1. Are you Actually Ready?
Homeownership can lead to sudden disillusionment, just as many married people quickly find out that marriage is not always as exciting as the wedding day.
Homeownership comes with various responsibilities, beyond financial ones. More on this shortly.
As a homeowner, you’re responsible for maintenance and repairs, meeting legal obligations, monitoring mortgage rates, and even securing the premises.
You might also find yourself worrying about falling into the hands of cowboy builders, who might not only scam you but also create further damage to your property.
If you’re not careful, the constant concern of maintaining your home might increase your stress levels, and affect other areas of your life.
Fortunately, some people are self-aware enough to realise that the hassles of property maintenance aren’t for them, so they’d rather rent.
Therefore, before you make this big life decision, make sure you’re financially, physically, and mentally prepared.
2. Have you done the math?
The shocking level of financial responsibility that comes with homeownership is arguably the number one reason why many homeowners regret their decision.
Beyond the deposit and monthly mortgage payments, there are other expenses that may not be obvious at the point of purchase.
Some of them include property taxes, homeowners’ insurance, utilities, and maintenance costs.
Another financial implication of buying a house is the cost of living in the city where your property is located. This is a factor that will affect your disposable income for as long as you live in that part of the country.
Being blindsided by any of these recurring expenses can throw a wrench into your finances.
One way to prepare for this is to take building a healthy emergency fund very seriously.
So, before buying a home, compare these one-off and recurring expenses to your income and determine whether or not you can afford them.
Fortunately, there are homeownership calculators to help you do just that.
3. How does the cost of homeownership here compare to other places?
This is a big one and it’s surprisingly not talked about enough.
A straightforward comparison of home prices can save you hundreds of thousands of dollars and long-term opportunity costs in the millions.
For instance, the typical home value in Naples is $590,000, while the average home value in Los Angeles is $917,000. That’s a difference of about $370,000.
Can you imagine the impact that could have on your down payment or monthly mortgage? In fact, if you invest it at 10%, after 10 years, you’ll have a million dollars!
Moreover, the cost of living in Los Angeles is higher than in Naples.
Just think about how you might feel if you discover this only after buying a house in Los Angeles, when you would have been content with one in Naples.
Before you commit to buying a house, determine what’s important to you in a property and its location, then shop around.
You’ll realise that there are houses in other parts of the country that offer similar features and amenities at a fraction of the cost of the one right in front of you.
4. Am I comfortable living in this neighbourhood?
What makes answering this question particularly important is that, while you can control what happens in your property, you essentially have no control over the day-to-day life of the neighbourhood.
For instance, you can’t change your neighbours’ habits, the local schools, or the crime rate of where you live. You can only adapt.
After all the work and sacrifice that went into buying your house, you don’t want to realise that you’ve made a terrible mistake of buying a house in the wrong neighbourhood — a place that doesn’t suit your lifestyle, preferences, or values.
So, before you buy a house, research the neighbourhood and its surroundings.
You can use online tools like Neighbourhood Scout or Area Vibes to gather information such as demographics, amenities, crime rates, school ratings, and more.
Depending on how meticulous you want to be, you can also visit the neighbourhood at different times of the day, to get a feel of the atmosphere and noise level.
You can even talk to some of the residents and ask them about their experiences living there.
Remember, your home is your haven, so make sure you choose a neighbourhood that makes you feel happy and safe.
Final thought
Buying a home is a dream for many people, but it can also turn into a nightmare if you don’t do your homework.
Homeownership is not a decision to be taken lightly; it involves a lot of financial, emotional, and practical implications.
To avoid regretting your decision, do the following:
- Prepare for the responsibilities of a homeowner
- Do the maths
- Compare prices from different places
- Choose a neighbourhood that aligns with your lifestyle, values and preferences.
Buying a home is a major milestone. Make it an experience that brings you joy and fulfilment.
Disclaimer
This article is for educational and informational purposes only and should NOT be considered a financial advice. Investing is risky. Please seek the services of a licensed financial advisor should you require one.
