Buying a home can be very exciting. But it can also be scary if you’re not sure if it is the right decision for you and your family. Many factors go into whether it makes more sense to buy or rent. Here are four things you should have before you take the plunge into homeownership. If you have them, buying may be a smart move.
1. An Emergency Fund: If you have avoided or paid off debts, your credit is healthy and you are saving for retirement, you may feel good about your financial situation. Before buying a home though, it’s important to go another step further: Focus on building up an emergency savings fund.
While everyone should really have an emergency fund to cover unexpected costs, it’s especially important to homeowners. This should be in addition to the money you plan to use as a down payment. If you have enough liquid cash to cover three to six months of your living expenses, you are much more prepared for homeownership. This way, in case your steady income is interrupted, you can still afford mortgage payments while you get back on your feet.
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