Intro to Adulting: Housing

So for most of us, buying a house is a pretty big deal. Literally & financially. It is a huge milestone and a very important achievement in adulthood. I can share that there is a huge difference especially emotionally between coming to a home you own and a house you rent. Having been on both sides, let me add to the rent vs buy debate, when to buy and home to buy brigade. 

As usual, I don't know what I don't know. If you know, share your knowledge.

P.S. This is another FAQ style post similar to credit cards

To start, why BUY a house? 

Buying a house (that you love in an area you want to live in for the foreseeable future) is a great milestone. You have a place you can FULLY control and enjoy having the responsibility for. Also, you become alpha and omega of that property as long as you keep up with your finances & fulfill government obligations for the house. 

I think buying a home is a sort of rite of passage. It tends to depict stability and that you've settled your roots somewhere. From a young adult's perspective, it sounds very much like a home owner is further into the adulting game than most. Kudos!

Why RENT a house?

Renting is great way to control property. You get to live in a space you like or love without handling the cost and the responsibilities of ownership. It gives you great flexibility in terms of commitment to the property and the start up costs are significantly lower than owning the home yourself.

Rent vs Buy, which is better?

This will always be a personal decision, the answer can literally be; Rent, Buy or Both (as in buy a place, rent while you're away, eg. if you travel for work but want a homebase).

From a short term impact, renting is generally better. You can predict your home's true cost, the rent.

If the roof breaks, not your business. If the electric circuit needs some work, guess who's paying? Not you. If the plumbing has a problem, that's nice, I wonder if the landlord knows a guy. The fence falls apart; Oga Landlord, come and see your house.

On the other hand, if you're the owner, insert yourself in the above. 

From a long term perspective, there's an interesting video you can watch below.

Can I afford to buy?

Affording a home is very different from being ready for it.  Affording a purchase of this magnitude financially just means you have the cash. However, I would suggest that in addition to having a the money for the purchase, have enough money to survive a couple of months.

I also suggest you generally have as few loans as possible, try not to have more than one loan. This will help you when you're qualifying for a mortgage too. One big loan is better for knowing where your money is going than a dozen tiny loans  (even if mathematically they are the same). 

Your house will attract dozens of bills from places you never expected, have fewer loans not to overwhelm yourself.

When am I ready to buy?

You might be able to afford a house, doesn't mean you are ready for it. There are way too many things that can go wrong in a house that you would otherwise ignore. Some of these are; a faulty faucet, broken windows, locks, clogged sinks, broken floor tiles, air filters in your furnace, paint, creaky anything, leaking pipes.  

Not to scare you, but it is work. You can do this.

Also have a handy set of tools available, powertools are best. Get a vacuum cleaner too. If you're not about keeping up with the place yourself, have the money to pay someone else to do it for you. 

What do I need? 

Income: stable and predictable. A good job should suffice. If you can't get that, have the ability to create your own and the proof thereof. 

A good realtor: A good one is worth more than he/she will earn in your transaction. When you're the buyer, the seller will pay for your realtor anyways. So you might as well take full advantage of that.

A mortgage specialist (unless you have bucketloads of cash to buy outright): Self explanatory.

Good credit: To prove you are trustworthy with borrowed money.

A real estate lawyer: Generally, they just register the paperwork and make sure everything is legally sound. 

Finally, practice your signature: You will sign your life away in the process. There is so much paperwork, it's unbelievable. Make sure you read what you are signing.

Anything else?

The bank will approve you for more than you need, don't get excited and use the max. 

Buy a home you can bend to your needs. What I mean is, you will evolve and grow, be sure your home can too.

So for example, say you buy a 2 bedroom condo, the second room can be rented to a friend, it can also be a study, or a storage space, or a guest room.

If you buy a 1 bedroom for the same price, you can't do that.

Budgeting advice before you buy.

If you are following your budget, I suggest you adjust it with your new proposed expenses for your house. Estimate more than you think you'll need and if your lifestyle will change significantly, keep searching for another place.

Budgeting advice after you buy.

Your house is basically a pet. You are only feeding it money and all you want to do is love your new space. You want to make the space distinctly yours to enjoy.

Create an entirely new budget based on expenses, mortgage payments and improvements you want to add to your home. Maintain it monthly as you would your personal one. In the income for your home budget, use the amount you planned to spend on housing/rent from your personal budget.


Congratulations in advance!