According to a recent study conducted by Harvard University found that almost 40 million Americans can’t afford their homes. Mortgage, insurance, and taxes have become a heavy burden for many people that bought too much house, to begin with, and now are financially distressed. The study also found that people that want to buy are unable to, due to the high cost of homes.
Wages have not kept up with inflation, while the increase in rent has risen considerably over the last few years making the dream of owning a home a bit less unattainable.
In the Akron and surrounding areas, the cost of a home is affordable depending on the neighborhood. A quick search can give you 2,752 homes for sale in less than a minute, with prices ranging from the low 20’s to the 250s. Homes in cities like Los Angeles and New York seem pretty impossible to own. The median house value of a home in Los Angeles is approximate $633,000 according to the website Zillow.
What to do then if you really want to own a home? You have to ask yourself several questions before you decide.
- Have you saved enough for a down payment? Banks and mortgage lenders’ interest rates and options for a loan change if you have a nice downpayment for a home. It is also good for you to know you can be disciplined enough to save as the costs associated with keeping a home after you buy it can be shocking for first-time buyers.
- How much house can you afford? You can go to any mortgage calculator on the web and enter your income. It will give you different options depending on what you enter, but it should not exceed more than 35% of your debt. Your monthly mortgage payment, car payments, child support payment, credit card and student loan payments should not exceed that amount. Remember you CAN buy too much home and eventually lose it, don’t fall into that trap.
- Is this your dream home, or only a home for a few years? Many people buy a first home planning to eventually get their dream home. If that is your case, planning where and what to buy is extremely important. You don’t want a neighborhood where home values are decreasing yearly, or if you have children, where the school district is not up to standard. Take your time and choose well.
- How do you feel about buying a fixer-upper? If you or your spouse are handy and enthusiastic about fixing a home, why not buy a fixer-upper? Depending on the problems with a fixer-upper, you can really have a beautiful home without having a crippling mortgage. Pay attention to the foundation of the home first and for most. The foundation’s structural integrity is too important to the home for you to leave it up to chance. If there is a problem with the foundation, call a foundation repair specialist for a quote and professional advice.
- Will your family keep the standard of living they were accustomed to? Buying a home does not mean you have to sit around staring at the walls of your home for years because you did not anticipate the cost associated with keeping up the home. The mortgage payment, taxes, and insurance you calculated before buying the home does not take into account the upkeep of the home. As a rule, you need to save 1% of the cost of the home for the upkeep every single year. Sometimes, we do not anticipate this and it can be a bit painful if we are already stretched too thin.
Most people would like to own their homes, it is the American dream after all, but don’t fall into the trap of buying too much house that you are always afraid of losing it.