Deciding whether or not you should buy a new house is an aching dilemma. On the plus side, a new home will be a change of scene, environment, and atmosphere. On the downside, it costs a ton of money. So, here are some things to avoid when trying to decide on this purchase:
Don’t give in to social pressure.
Society puts a lot of pressure on us—that’s a fact. For instance, we have to graduate from college after four years. Then, we have to get a job, preferably something stable to settle with right away. By the mid-20s, older family members start asking about marriage plans. When friends start buying their own homes and cars, we tend to apply pressure on ourselves to attain the same thing.
Therefore, ask yourself: Do you need a new house? Or is it only to prove yourself to society?
Conformity is not a bad thing, for sure, but in this area, compliance could mean a 30-year debt from a mortgage company in Naples. There are a lot of considerations that come with this massive purchase, so you need to guarantee that you are secure for the next years of your life.
Don’t ignore existing debts.
If your current financial status has a car loan and a student loan, it might be difficult to power through another loan or get the approval of another one. While owning a house is a dream, and you’ve already gone through the depths of Pinterest out of excitement, exhausting yourself and your bank account for a new home may not be a wise move. You could live paycheck-to-paycheck, trying to pay off all these loans, sacrificing more than just money but also mental and physical health.
Don’t think about a future increase in income.
Let go of the pen in case you’re signing a paper with the expectation of having a promotion or a booming business. You might end up buying a house that is more expensive than anything you can afford. No matter how high the odds are, life is still uncertain. Focus on what you have now. You should have a down payment, enough credit, and the loan should only take up a quarter of your income.
Don’t forget about financial literacy.
According to Investopedia, “Financial literacy is the ability to understand and effectively apply various financial skills, including personal financial management, budgeting, and investing.” It’s how a person handles their money to continue to thrive and survive in this world. It does not only talk about “spend less than you earn,” but it also requires the knowledge of interest rates, identity theft and safety, debit-credit, etc.
In buying a new house, think about the budget. How much can you afford? How long are you willing to pay off the mortgage? Is the month expenditure sustainable given the interest rate and your projected income? Will you still be able to save through the years and make significant investments?
Weighing the answers to these questions may help you decide whether you need a new home or what kind of house and neighborhood you can choose from. Trust your knowledge and instincts because these will make you aware of your capacities.