First time Buyers: Play House Before You Buy The House

Are you seriously thinking about buying a home, but you’re nervous and unsure as to whether you can comfortably afford it? Then why not “try it before you buy it.” There are two experiments that you can conduct that will let you know if you are financially ready to take on the responsibility of home ownership. You can try adding to your current budget the additional cost it would take to purchase a home. Or you can actually test drive a home by renting one.

The BudgetFirst estimate how much the additional expenses of living in a new home would be. The numbers below are for the sake of this example only.

Apartment
Rent $600
Apartment Utilities $100
Maintenance $ 0
Total $700

Home
Mortgage Payment $900
Home Utilities $175
Maintenance $100
Total $1175

Additional cost on Homeownership $475.00

In the above example your current household expenses are $700 per month. The estimated additional expenses of a new home are $475. The additional $475 per month would be deposited into a savings account (untouched!) for six months. At the end of the six month period you would analyze whether the additional costs will affect your standard of living. If after stashing away the additional monies per month you are able to maintain your current lifestyle comfortably or a lifestyle that you are comfortable with, then this experiment should give you the confidence to possibly move forward into homeownership. However, if this experiment leaves your current lifestyle unrecognizable and you are down to sardines, cheese & crackers and potted meat then you might want to postpone buying a home at this time.

Rent A Home
Another option for “trying before you buy” is to rent a single family home in an community that you would consider purchasing a home. In today’s market it may be fairly easy to find a home to rent with the surplus of homes on the market. In doing a simple rental agreement, not to be confused with a “lease option“. With a lease option you will need to come up with more money up front as though you were actually purchasing the home. Renting a home will give you the opportunity to acquire practical “hands on” experience. You will have the opportunity to live like a homeowner and obtain a front row view of the possible expenses, maintenance and repair issues, that are involved without actually being responsible for them. You get to experience the neighborhood as well as the neighbors before you sign on the dotted line. Who knows, when the lease is up you just may want to buy the home. For more information about your leasing and home buying options, visit us at MyFirstMichiganHome.com