After a handful of years working very hard to repair rebuild my credit, a whole new adulting idea came to mind. The thought of owning my own home.

I made a call to a realtor last year and made it very clear that I wasn’t ready to buy, but that I wanted to gather information on what that would look like so I could plan for the future.

The realtor was very friendly and honored my request for information only, answering my questions and connecting me with a lender who would do a soft pull on my credit and give me the low down on what I might qualify for and explain things like closing costs, inspections, appraisals, and all the other things that come into play when you purchase a home, not to mention how long you intend to stay there.

There are a lot of things to consider when thinking about doing something like this. As much as I want to own my own home, there are a lot of factors that need to be considered and none of them to be taken lightly.

Consider what J. L. Collins has to say about the subject. He makes some very good points that should not be dismissed.

Rent vs Owning Your Home: Opportunity Cost and Running Some Numbers

Why I haven’t taken the leap

• My first hesitation is that the current interest rates, even for someone with a good credit score, are outrageous compared to the 1-3% they were just a few years ago.
• In my opinion, the real estate market has gone insane recently. A home that might have cost $150,000 a few years ago is now much more expensive, almost doubling in price for the same house.
• I didn’t spend all this time learning to manage money wisely to risk putting myself in a situation that leaves me unprepared for the unexpected. Having a sufficient emergency fund that covers 6 months worth of expenses is essential prior to considering making such a big decision.
• When you purchase a home, you generally have to make some kind of down payment. Having a down payment of at least 20% of the home’s purchase price is ideal. This down payment needs to be saved separately, without touching the emergency fund.
• If your down payment is less than 20%, the mortgage company can, and likely will, require to to carry PMI (Private Mortgage Insurance), which is essentially insurance to protect the lender, not you. This is tacked on to the mortgage payment and is an expensive, unnecessary cost.
• Closing costs are another issue. In addition to having an emergency fund and a decent down payment, there are other things that have to be paid. Closing costs include things like the appraisal, home inspection, title insurance, and a handful of other things that cost money up front. You can generally expect to pay another 2-5% of the purchase price for closing costs.
• Owning a home also means that any maintenance and repairs needed are the sole responsibility of the homeowner. There’s no landlord to call when something breaks. You have to fork over the cash to fix it. Not to mention the added cost for lawn care and landscaping maintenance.
• Then there are other costs to consider such as higher utility costs. Homeowner’s insurance is quite a bit more expensive than renter’s insurance because you are now insuring the dwelling instead of just your stuff.

Reconsidering what we have

We currently live in a 2 bedroom 1 1/2 bath townhouse. The area is somewhere between rural and suburban. It’s close enough to the city that anything we could need to get to is less than 20 minutes away, and far enough out that we really don’t have to deal with traffic around home.

There’s a nice lawn that’s maintained by the landlord and plenty of space to walk our 2 small dogs who are allowed to live here with us without any additional charge, other than the one time pet deposit we paid a few years ago.

We pay the utilities, which are fairly low, costing us an average of $150 per month. And the rent here is on the low end of similar places in the area. Honestly, we haven’t found anything less expensive that’s comparable to what we have.

We like our neighbors. We like our landlord. We like the location. We have a decent view of the mountains. We have enough room on the porch for me to edge it with planters full of herbs and flowers in the warmer months. Overall, we have a pretty sweet deal.

Willing to wait

As much as I’d like to have a nicer kitchen, a fenced in yard for the dogs, a place to grown things in the ground, a covered porch to sit on, a private space without neighbors quite so close, and a whole list of other things I wish I had, there are a lot of really good reasons to hold off.

Recently I came across an article that offered the use of a calculator that allows you to compare buying and renting based on your personal circumstances. You can check it out here.

This calculator helped my realize that as things are right now, it actually saves me thousands of dollars to rent for the moment, especially without a substantial amount of money saved.

My husband and I have decided that, although we still want to own our home one day, we are better off working towards this as a long term goal broken into smaller ones to focus on.

• Emergency Fund first – fully funded with 6 months of expenses to cover the unforeseen.
• Down payment – a minimum of 20%.
• Closing costs – an additional 5% saved for this.
• Better interest rates – if we have the previous goals finished and interest rates are still high, we will likely continue to save and wait until they go down again. Unless interest rates go below 4%, it’s less expensive for us to rent.

With all of these goals in mind, we will still keep our options open, willing to be flexible. There is no way to know what the future will look like. While it’s important to have a plan in place and goals to work towards, being rigid about them could result in missing out on a great opportunity, should one arise.

Summary

If you are considering buying a home, there are a lot of things you should keep in mind before making a decision. Do your research. Make sure you understand the total costs and liabilities. This is not something you can easily walk away from so it’s worth your time to plan and educate yourself on every detail.

Buying a home could be a good investment for you, but it could also be a financial disaster waiting to happen. Ask questions. Talk to experienced people that you trust. Gather information from multiple sources. Walk away from anyone who tries to rush you into a decision. This is not one to make without serious thought, consideration, and planning.

Buying a home isn’t just a large purchase, it’s a life event that will affect you for a very long time. Make sure you know what you’re walking into before you put your toe in.