Four things to do before you consider buying a house
Prospective homeowners, take note: There's more to buying a home than having good credit and knowing the housing market.
Most articles focus on the financial nuts and bolts of the things you should have in order before you consider buying a home. You’ve got to have good credit. You’ve got to have a down payment. You’ve got to know the housing market. And so on.
Yet those aren’t the only important things to be thinking about. Here are four somewhat unorthodox things I would strongly suggest any prospective homeowner seriously tackle before buying a home.
Save a significant amount each month like clockwork for at least two years.
A mortgage payment requires financial discipline as well as enough money, period. Can you cover the mortgage? The insurance? The taxes? The constant expenses that go with homeownership?
Use a mortgage calculator to figure up what your monthly mortgage payment will be. Tack 50% on top of that for insurance, taxes, and other expenses. Subtract your current monthly rent payment from that.
If you can’t save that amount each month, then you’re not ready to buy a house of that size.
People will give all sorts of reasons why such a statement isn’t true.
“You really don’t need that much money each month.” Let’s hear that refrain again when your hot water heater fails at the same time as you need a new lawnmower and your lawn needs re-seeding.
“Our lifestyle will be different when we own a house.” In what way? The only major change will be that you have less spending money and, most likely, more room to store stuff.
Such statements are merely ways to pass the buck on to your future self, the responsible one who owns a house and makes more money and makes all of the payments. If that person doesn’t exist now, merely owning a house won’t make that person exist in the future. Don’t ever base your plans on what you hope might happen someday.
Take responsiblity now. See whether or not you actually can make it work in terms of your month-over-month finances. If you can’t do it now, then you won’t be able to do it then.
Sell off all of your stuff that you don’t use.
The less stuff you have, the less space you need. The less space you need, the smaller house you need. The smaller house you need, the more likely it is that you’ll be able to afford that house.
Go through your closest. Pare down. Get rid of stuff that you don’t use.
If you sell off a lot of your stuff that you don’t use, you’ll not only realize you don’t need as much space as you thought you did, but you’ll also find that you suddenly have some cash in hand that can help you move towards actually owning a house.
Even better: the less stuff you have, the easier (and less costly) it is to move.
I’m not arguing on behalf of selling off stuff that has value to you. I only suggest that you go through your closets and cupboards and get rid of the stuff that you don’t use. It’s just sitting there taking up space, convincing you that you need more living space, when in fact it could be money in your pocket and freedom in your life.
Fix some stuff.
If you’re a renter or you live at home, it’s easy enough to call a landlord or a parent when there’s a problem. “The toilet seems to be broken.” “There’s no hot water.” “Why won’t the dryer dry my clothes?” “There’s water flooding the basement.”
Here’s the catch: when those things happen in a house of your own, it’s up to you to fix it. If you can’t, you’re going to be shelling out fistfuls of cash to pay someone to do it.
When you’re living in such an environment, you’ve got a perfect opportunity to learn how to do such things with something of a safety net. When the toilet breaks, try to fix it yourself. Watch some YouTube videos on toilet repair. Identify what parts you need, find a good hardware store, and pick them up. Give the repair a serious attempt all by yourself.
If you can’t do it, then report the problem. Don’t just walk away, though – watch and learn from someone who can do it. Watch your landlord or the repairman. Try to figure out where you went wrong and how you can avoid it next time.
Even if you fail, you’ve learned some things. You’ve learned how to use tools. You’ve learned how to identify problems. You’ve learned what the equipment looks like. This will make solving future problems much simpler and much more cost-effective, especially when you’re living in your home and something goes wrong for the first time.
Figure out why you’re buying a home – there are lots of bad reasons and non-reasons to buy.
Don’t buy a home because that’s what you’ve been told you’re “supposed” to do.
Don’t buy a home because that’s what you think you’re “supposed” to do.
Don’t buy a home because it’s a good investment for the future. It’s really not all that great of an investment.
Don’t buy a home because you might get married and have kids someday and you need the space for this hypothetical future.
Don’t buy a home because you think it will lead you to some sort of idealized suburban life. A home won’t change who you are.
Don’t buy a home because you’re trying to “keep up” with someone in your life. It’ll make you fall further behind in the long run.
Buy a home because you it truly makes sense financially and you’re ready (and excited) to deal with the challenges of homeownership. Buy a home because it’s better for your housing dollar than the other options available to you.
Buy a home because it’s what you want and it’s what you can handle, not because it’s what others want.
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