Are You Ready for Home Ownership?
Homeownership is likely to be the largest financial commitment you’ll ever make. It may also be the smartest — provided you’re prepared.
Our quiz can help you decide if you’re ready to start house hunting, if you’re almost there, or if you need a little more time to prepare before you buy.
1. The main reason I want to buy a home is:
a. I want to start building up equity of my own instead of continuing to pay rent that only builds up my landlord’s equity.
b. I like the idea of owning my own place, where I will have the freedom to decorate and renovate the way I want.
c. The housing market is hot and I want to get in before all the properties are bought up and the prices are out of reach.
2. I plan to stay in the city where I now live:
a. More than five years.
b. Two to five years.
c. Less than two years.
3. I expect that investing in a home:
a. Carries a degree of risk and that I need to be prepared for potential swings in housing prices.
b. Should provide me with at least as good a return as an investment in the stock market.
c. Entails very little risk. I expect a great return on my investment as the price of houses is always on the rise.
4. My ability to make a down payment on a house is:
a. Good, I’ve saved enough to make a 20-percent down payment on a modestly priced home in my area.
b. Manageable, provided I can qualify for a low down-payment loan.
c. Going to require that I borrow to make even a minimum down payment.
5. I can afford the ongoing cost of owning a home:
a. I earn enough to cover the expected monthly mortgage payments, taxes and annual maintenance expenses on a home in my price range.
b. I can afford to meet the carrying costs and maintenance on a home if I count the pennies and keep a close eye on my budget.
c. I would have to cut back on my living expenses significantly in order to cover the cost of a mortgage and home maintenance.
6. When the unexpected happens, such as an accident, illness or job loss:
a. I have insurance or a rainy-day fund to protect my assets.
b. I scramble, but always seem to get by.
c. I tend to fall behind on my financial commitments.
7. My income is:
a. Dependable and predictable. I have a steady job and realistic expectations of future pay increases.
b. Stable, for now. I am currently employed but contemplating a change of career.
c. Questionable. My job is a bit uncertain at the moment.
8. My current level of debt is:
a. Low. I always pay my bills on time and try to pay off the outstanding balance on my credit cards each month.
b. Reasonable. I usually carry a fair bit of debt on my credit cards but I always pay the required minimum each month.
c. High. I sometimes find it a struggle to pay even the required monthly minimum on my credit cards.
9. Houses require upkeep inside and out. I plan to:
a. Budget to cover the cost of ongoing maintenance.
b. Do as much of the work myself as I can.
c. Rely on friends and family to lend a helping hand.
10. My understanding of the housing market is:
a. Solid. I’ve already contacted a REALTORâ and researched the cost of houses in my area.
b. Reasonable. I always check out the real-estate listings in my local newspaper.
c. Good enough. My friends say it’s a great time to get into real estate.
Time to add up your answers
If you answered mostly A’s, chances are you’re ready for home ownership. You’ve done the research and are prepared financially.
If you picked mostly B’s, you’re almost ready but still have some work to do. Refer to our list of related articles below for ideas and tips on how to qualify to buy a home.
If C’s were your choice, you should probably hold off on buying a home until you get your finances more in order to handle such a major commitment. Consider meeting with a financial advisor for tips on how to pay down your debt and formulate a home-savings plan.