Switching from renting to owning a home requires planning and a credit history. Or if you’re going to live in the nicest house in a transition area, that, too, could adversely affect how much your house is worth – which may not matter to you if you plan to live in the place for years to come and see it as a place to live and not an investment.
Mortgage terms, on the other hand, improve as the amount of available cash goes up. If you are fortunate enough to amass even more than the 20% required for the best rates, the extra money can go toward decorating and fixing up your new place or to lowering your loan amount and the resulting monthly payments.
At a 4.5 percent rate of interest (the kind of rate you’d get with a small down payment), you’d need to pay about $1,650 per month on your loan; roughly another $406 per month in property taxes and an estimated $100 per month for homeowner’s insurance.
Not a 100% guarantee the bank will loan you money – If you’re given loan pre approval based on having $20,000 in savings, but by the time you come to buy a home, you’ve spent some and you have only $18,900, then this is likely to cause some issues with your loan pre approval.
If someone asks why you want to buy a house and your first answer is something along the lines of Because I’m wasting money on rent” or Because it’s a good investment,” you might not be mentally prepared for all the responsibilities that come with home ownership.