Personal Finance
Are You Ready to Buy a Home?
There’s a lot more that goes into home buying than financial readiness.
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Prepare Your Finances: Scoop Up Some Financial Knowledge
What Are the Big Finance Folks Saying?
What do all the major money-based blogs say about first time home buyer readiness? Well, let’s see…
Bankrate’s senior economic analyst reminds us that the price of the house is important, but so is the interest rate. So long as you are ready to purchase a home, you can do a little shopping around to find the best deal…as you would with any other large purchase.
“It pays to shop around for the best mortgage interest rate when the time does come to buy. All too many buyers only focus on the price of the home when there are other factors that also help to determine monthly payments.” — MARK HAMRICK, BANKRATE SENIOR ECONOMIC ANALYST
Hamrick points out that there are some other signs of readiness:
- Solid credit score.
- Savings — both for the down payment and for repairs & maintenance on your new home. Some institutions will even require you to demonstrate you have several months worth of bill money in your bank account.
- Job security and a stable lifestyle.
- You know what you want.
- Your rent is rising and it makes more sense for you to buy (given your good financial standing).
Well-known financial advisor Dave Ramsey takes a similar conservative and well-planned approach. In his article Am I Ready to Buy a House? Ramsey goes almost all-in on cash & savings prep.
- Be debt-free with money for an emergency fund (first).
- Money for downpayment.
- Money for paying your own closing costs.
- Money for repairs and maintenance of a home.
- Money to pay the moving expenses.
Other sites such as Investopedia, Chase, and Business Insider all tout these financial ideals and go on about the DTI (debt-to-income ratio), or offer a helful quiz you can take to determine your home -buying readines.
But there are a few other areas of readiness you need to consider when buying a home — especially if it is your first home. Because I was as financially ready as I had ever been, just one year ago. I was preparing for my first home purchase at that time and honestly, if I’d bought a home at that time I would have lost it.
I wasn’t ready in other ways.
And no one is talking about those things. Not on many of the financial and investment and banking sites. And those things, I can tell you, are important too.
Job Security & Financial Stability — These Are Also Quite Personal
Perhaps some of those sites do touch on job security but honestly — how much do you trust your job to be here next year? And the next? Are you easily re-hirable if something goes wrong? If you are fired or laid off, what is your back-up plan?
And if you don’t have a plan or think it may take 3–6 months for you to find a new position — do you have that many months of income saved up as a cushion to get you through that time?
You see, had I bought my house last year…well, lets just say that I burned through my savings very quickly, even borrowed money to stay afloat, and still lost my rental apartment all within the first few months of 2023 — when the freelancing landscape fell apart for me.
Read more: The Ugly Truth of Freelancing
Without the cushion of a back-up plan, I shudder to think at how much more stressed and upset I would have been had I lost the home I’d fought to buy.
Instead, I simply reconvened, shuffled my life around a bit, moved to a more financially secure living situation, and that was that. I was grateful for the flexibility that allowed me to do this. NOT fighting to save my home may have actually given me the emotional stability to simply think logically about relocating to something more affordable for my new financial landscape, at least while I am recovering my business and securing and stabilizing new income for myself.
I found myself, during that tumultuous time, thanking the heavens I wasn’t a homeowner. I half-think that if I ever purchase a home for myself, I want to simply save the money for it and buy it out-right. As crazy as that sounds. A newsflash here is that all of those financial advisors have a finger in the pot, so to speak…they want you financing and mortgaging and borrowing…when real life is this: How can I live on the income I have, secure long-term housing, and not lose my arse while doing it?
I want to buy. But I don’t want a mortgage. And that feels more like stability to me.
Are You Mentally Ready to Buy a Home?
One other thing I feel the financial advisors won’t ask you is if you are mentally and emotionally ready for the commitment of being a homeowner.
They aren’t going to ask you if you are emotionally stable. But, are you?
They aren’t going to ask you if you are willing to set aside your own hopes, wishes, desires, and needs — to be the caregiver of a very big investment.
If you are willing to drop everything when something comes up with your home. Are you?
Or if you’re willing to wrap your time around house maintenance chores and security cares to protect your investment. Are you willing to prioritize your investment over your own personal needs — because this will come up, a lot.
Let’s just be brutally honest, here:
Homes are a lot of work and commitment.
- There are yearly fees, property taxes, homeowner’s association business, etc, to pay.
- There are maintenance things to do — all the time. Something always needs tightening, mowing, repairing, buying, setting up, removing, or hauled off — and you are the one to do it. (Or hire someone to do it.) Not everyone really wants to worry about those things.
- If you are a free-spirited student of life and want the open schedule, the open horizon — that home could feel more like a weight you must carry.
It’s ok if you don’t want the worry of homeownership — but don’t go into the home buying process thinking this will be the thing that grows you. Wouldn’t it be better to grow into financial stability and then buy a home when you are really ready? Rather than buying a home you aren’t ready to manage, then hoping you “get it together” at some magical and mysterious spot on the calendar?
Trust me, I’m nearly 50 and I am still not ready. Maybe I’ll live in a van next year? Who knows. I kind of like not knowing. Maybe you’d rather drop everything and travel sometimes? Maybe you’d rather live a few different places? Not stay in one area for too long?
Perhaps your life is full of social drama, financial issues, and constant change — buying a home may not fix all of those things for you.
Perhaps a Home Isn’t the Priority
Maybe working on yourself is more important right now. If that’s where your energies are needed most in your life right now — that’s totally ok.
There’s no reason to feel you haven’t reached higher adulting levels if you choose not to purchase a brick and mortar home. Hell, there are lots of happy people out there living a not-so-ordinary lifestyle (no 2-story home on the cul-de-sac for them) and they are still living the American Dream.
Don’t be afraid to define your own journey — even if traditional homeownership doesn’t feel right to you right now. That’s ok. Emotional readiness for buing a home is important — but also, authentically following your own path at your own pace.
There is some concept here of “settling down” that goes a long with homeownership, but you can settle down in other ways. Settling down, whatever that looks like for you, may or may not involve owning a home.
And while the banks aren’t going to have this very private and personal conversation with you — you should at least have it with yourself.
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Christina M. Ward is a freelance writer in cannabis, wellness, and clean beauty. Christina’s professional work has been featured in Today’s Health Science, LA Weekly, Village Voice, Men’s Health, and OK! Magazine, among others.
Christina also writes on personal journeys, productivity, and relationship topics for Medium publications like this one. If you want to read more of her work on Medium use this join link for unlimited access. A portion of your small monthly dues will go to support the work of the writers and poets that you read.
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