Homeownership is still a cornerstone of the American Dream but the younger generations are waiting longer to buy. Why? The reasons range from waiting longer to marry and have kids to (thanks to the housing crash of 2008) making smarter money decisions. But how much do you really need to buy a home?
Suze Orman Weighs In
The other of Women and Money has valuable financial advice, that applies to men too. Her general rule of thumb is to wait to buy until you have minimized your debt and have at least:
- An 8-month emergency fund
- Have enough to put 20 percent down
- Have test run your new budget for 6 months
Not Sure What Your New Budget Will Be?
You can utilize online calculators to estimate what the average monthly mortgage payment will be for the amount you aim to spend. Even if the payment price is close to your current monthly rent, Orman suggests adding on at least $400 more each month. This will account for increased utilities for larger homes, yard and landscaping, maintenance and repairs, insurance, taxes, and more. In many case, your new expenses will be much more than $400 per month.
Don’t Forget The Hidden Costs Of Home Ownership
Hidden costs you must also plan for and be mindful of include:
- Moving expenses
- Costs incurred if your move in/move out date don’t match
- Window treatments
- New furniture
- Paint and wall coverings
- Initial maintenance and repairs
- And more.
With the tips above you will go into homeownership with the peace of mind that you have taken a proactive approach to your financial future.