Recent events present increasing economic challenges, so much so that many are on the brink of losing their jobs. It’s only natural for anyone to secure themselves financially, and investing is a safe way to bolster your finances.
One could invest in shares sold by huge companies, more commonly known as stocks. Still, people who have a smaller appetite for risk often prefer investing in less volatile assets such as real estate. Aside from freeing them from the vicious rent cycle, owning a house opens them to new financial opportunities.
However, financing a house is not that simple. Only rarely can a wage earner pay most, if not, all of a property upfront. Often, they seek the aid of a broker to help them land a mortgage or other financing options. Add to that the legal proceedings before a parcel of land could officially be declared yours.
While the process seems too intimidating for any first-timer, anyone can buy a house. If you’re on the same boat, you could ponder on the following questions to assess your readiness in shouldering the responsibility of owning a home:
Do I Have Savings?
Have you been maxing out—if not, spending—almost all your monthly salary, or were you wise to set aside a fixed amount or percentage for an effective plan? If you’re the latter, do you have a specific strategy where to invest these funds? Do you plan to invest in something big, or will you leave the money lying dormant in your savings account, only to be touched during emergencies?
If so, do you have a good idea of how much you need to save up for these investments? Knowing how much money you need to raise for a house will help you stay focused on it rather than carelessly spending your hard-earned money. As a general rule of thumb, accumulating at least 10 percent of a house’s required down payment prepares you for purchasing it.
Do I Have a Stable Job?
Regular employment or a successful business with an established customer base ensures a steady cash flow. If your job is more of a project-based nature (that is, you don’t earn unless you’re assigned a project), saving up for a house is not impossible. Nonetheless, it won’t be easy. The same is true for contractual, time-bound employment because if that contract expires, that means you’d have to find another job or ask the same company to extend your tenure.
Am I Earning Enough to Pay for the Monthly Mortgage?
Having a stable source of income is one thing, but being able to afford your needs and shouldering additional obligations is another. Suppose you can pay for your living expenses such as food, utilities, and transportation and can manage to spare some money for savings and emergency funds. Do you still have enough left for your mortgage payments? If you’re not so sure, perhaps answering the following two questions could help dispel your doubts.
Is My Lifestyle Sustainable?
If you put your mind to it, you can live on a smaller budget. Reflect on vices and indulgences like smoking you could do without if it will benefit your well-being. Otherwise, you could save the money you’d waste on partying on the weekends, purchasing luxury items, and other cheap thrills. That way, you’ll keep your cash for more valuable and long-lasting things like the house for which you’re paying. The earlier you realize this, the easier you could come up with a considerable amount and the faster you could fulfill your dues.
Is My Salary Increasing?
Owning a house fills anyone with vigor. Still, this vigor gradually wears down as years go by as interests rack up in your mortgage. This steady increase could eventually strain your finances—that is, if you don’t climb up the career ladder. Besides, prices of commodities and services are bound to increase over time.
A salary increase all boils down to having a stable job. Having a steady job almost always guarantees you a constant salary increase. With increasing income, you’ll have the capacity to afford your needs and continue paying for long-term obligations such as your insurance, retirement fund, and mortgage.
A yes to all the questions more or less affirms you can now afford your own house. Still, this is no easy feat, so you have to plan your finances and purchase carefully. You need to consider other things like where you’d want to live for the long term and the family you’re planning to build.