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Are you feeling like it may be time to take the plunge and purchase your own home in Chicago? Purchasing a home can seem a little overwhelming and frankly, a bit scary, however, there are ways to determine if you’re financially and emotionally prepared for home ownership. Simply ask yourself these questions:
Why do I want to own instead of rent?
Determining your reasoning to buy a home can be eye opening. Are you wanting to buy a home because you feel that’s what you’re supposed to do at your age, or do you want to buy a home because you want a place to call home? Are you buying a home because you feel it would be a wise investment, or are you buying a home because you want to put down some roots? If your reasoning is due to pressure from outside sources or the fact that you’re planning to use your home equity as an ATM down the road, you may want to reconsider, as it may not be the best decision at this time. Purchasing a home is a large commitment and should be done for the right reasons.
Am I stable in my employment?
Do you feel like you have job security? Do you enjoy your job? Do you foresee in the near future a change in profession? If you’re planning to change jobs, will you receive a comparable salary to the one you have now? These are important factors to take into consideration – after all, you’re committing to a fifteen or thirty year mortgage and need to make sure your monthly payments can be met.
Do I want to live in Chicago permanently?
Buying a home doesn’t necessarily mean that you have to live in it forever, however, it’s a good idea to imagine that you’re buying a home to reside in for at least five years. Ask yourself if you plan to stay in the city long enough to buy a home. Is there any chance of your work requiring a relocation? Are you close enough to friends and loved ones? Of course, should the need arise, you could sell your home or rent it out, but be aware that you may not regain your investment if you have to do either last minute.
Can I afford it?
This may seem like an obvious question, but there are a lot of factors involved in the actual cost of purchasing a home aside from the calculation of a potential monthly payment. Do you have a down payment and funds to cover closing costs? In order to avoid paying private mortgage insurance (PMI), a lender will require a down payment of 20%. Additionally, you’ll need funds for closing costs such as origination fees, appraisal and home inspection fees, and a proration of property taxes. It’s also important to buy within your means and not overextend yourself. Be realistic when creating a budget of monthly expenses – if you’re a person who likes to dine out a few times a month, include that expense. Just because you own a home does not mean you’re going to change the habits of your lifestyle.
How stable is my relationship?
If you’re planning to buy a home with your significant other, make sure that your relationship is happy and healthy. Remember, you’re buying a home together and using both incomes to pay the mortgage. What will happen if one of you no longer wants to live there? Make sure you’re both on the same page prior to signing on the dotted line.
Do we plan on having kids?
Typically, when a couple chooses to extend their family by having children, they lean towards buying a home and putting down some roots. If you don’t have any children as of yet, ask yourselves if that is an option in the near future. If the answer is yes, you may need to purchase a larger home and you’ll definitely need to adjust your budget, as kids are expensive. Priorities will change when it comes to the house hunt. For example, schools will be more of a factor than proximity to restaurants when choosing a location, or you may want the bedrooms adjacent to one another for safety reasons.
By asking yourself these six questions, you’ll be able to better determine if home ownership is right for you. Owning a home is such a huge accomplishment as well as a huge responsibility – it’s best to go into the process prepared and eager. Are you ready to take the plunge?