Should You Buy A House?

With all the money that everyone is making on cryptocurrency, or just from a regular job, one would wonder if they should put their money into getting a house. Its part of the American dream to be a home owner, but are you ready for that substantial investment.

Buying a house is certainly not for everyone. Some would argue that owning a home is a liability rather than an investment. Some of the factors that you should consider are your financial situation, your career situation, your family needs, and your goals.

To buy a house, you need to put down at least 20% down and have at least four months of expenses set aside in case of an emergency. You can certainly get a house with less on money down but you’ll have to pay private mortgage insurance (PMI) each month if your down payment is less than 20% of the purchase price. If you can’t make a 20% down, it may means that the house is too much for you or you need to save more for your down payment or both. Only you can decide that. I would suggest that you not spend more than 4X your annual income on a house. The less you spend on a house, the faster you can pay it off.

Of course you should only buy a house when you are at a stable point in your career. You are happy with your career and don’t plan on relocating. There are definitely unforeseen circumstances that may change that but otherwise you are set on your career front. You don’t want to buy a house live in it for a year or two then have to move. It would be a costly mistake to own a house just for a few years. There are exceptions to that, of course, for instance if you buy a foreclosure at a bargain and rehabilitate it for sale later. But be careful with how much you spend versus how much value added your addition to the house when you sell it.

If you are married or with a significant other, then both of you must be on the same page. Your spouse must have the same career security and also wanting to buy a house. The best strategy for married couple would be to calculate the expenses only from one spouse if they both are working. The money of the other spouse can be used to pay toward the principle each month so that the mortgage can be paid off much sooner than the typical 30 years mortgage. Just double your mortgage payment each month and you can pay off your house in 10 years and save hundreds of thousands in interest on your house.

At the end of the day, you are the only one that can answer that question for yourself. As a home owner myself, I would suggest 20% down payment to avoid PMI, stable happy career, and your spouse is supportive in buying a house. Also a big bonus would be to pay off the mortgage as soon as possible if you are seeking financial freedom. Rent is the largest living expenses and if you can eliminate that, you have much more options in doing what you truly wanted to do. When you are ready, best of luck on house hunting!