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Herecently sharedfive questions every person should ask before purchasing a home.
Heres what they are and how asking them canhelp you make the right decision.
Will I Live Here for 10 or More Years?
First, Sethi says to consider how long youll stay in the house.
Your answer can impact whether buying or renting is a smarter decision.
Sethi says its best to buy when you plan on living somewhere for 10 or more years.
But your exact number may be somewhere in between.
If you arent sure, pull up a housing versus renting calculator online.
Input your financial details, and the calculator will tell you whether renting or buying makes more sense.
Will My Total Monthly Housing Costs Be Less Than 28% of My Gross Income?
If you spend too much more than that, you may struggle to save for other financial goals.
Sethis advice of 28% is very similar to this common wisdom.
Have I Saved 20% for a Down Payment?
Next, Sethi says to consider your down payment.
If you havent saved at least 20%, he says you probably shouldnt buy the home.
There are a few reasons for this.
This increases your monthly housing bill, so you end up paying more for the same home.
People sometimes buy houses with less than 20% down.
But that doesnt mean doing so is the right move for you financially.
How Will I Feel If the Value of the House Goes Down?
Purchasing a home is amajor financial decisionthat can tie up your income for decades.
Sethi asks you to consider how you would feel if something similar happened to your homes value.
If you woke up one morning and your home was worth 15% less, how would you feel?
If you really love the home, a temporary dip in value may not matter.
Am I Excited About Buying?
Finally, Sethi wraps up with a nonfinancial question.
This is all about checking in with your feelings about buying the home.
For instance, are you dreading the financial commitment?
If so, you may want to think twice about buying.
Some nervousness is to be expected.
However, they arent the only factors that matter.
For instance, maybe theressome lingering uncertaintyabout your career.
You might want to remain open to new opportunities in other geographic areas.
Renting is also more financially straightforward than owning a home.
If something breaks in an apartment, your landlord will fix it on their dime.
But ask yourself Sethis questions anyway.
Doing so can still help you makemore informed financial decisions even if they arent always the optimal ones.
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