You may have heard that buying a home is better than renting. After all, why “throw money away” on rent when you could be building wealth through homeownership? Financial professionals say the decision isn’t that simple. The answer depends on your personal and financial situation. Before you begin house hunting, ask yourself two key questions: Can you afford to buy? And should you buy?
Can you afford to buy? While being ready to purchase a home means having enough money for a down payment and a monthly mortgage, other financial obligations are involved.
It’s important that your debt levels are manageable before you buy. Without a mortgage, it’s ideal for your monthly debt payments to be less than 20% of your gross monthly income. With a mortgage, debt payments should stay lower than 35%.
