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Melissa Jean-Baptiste is not pictured.
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For many, buying a home is considered the cornerstone of the American Dream.
But for Melissa Jean-Baptiste, closing on her first home filled her with regret and dread.
Avoid these feelings by having a fully funded emergency fund and pricing out costs beyond your mortgage.
Melissa Jean-Baptiste paid $40,000 for a down payment on her first home.
But once she wrote that check, she wasn’t happy or excited.
Instead, she was “filled with nothing but regret and dread.” As she writes in her book, “So…This Is Why I’m Broke,” “I didn’t have a clear vision of what I was doing, why I was doing it, and who I was doing it for.”
Jean-Baptiste realized that she hadn’t asked enough questions and that she had gotten caught up on a moving train charging forward to that closing. “Deadlines had to be met, paperwork had to be filled out, and every person involved had to get their cut,” she writes. “In retrospect, it only felt this way because I didn’t ask questions. I didn’t take the time to make myself comfortable with this major life change that would require more adulting than I was prepared to complete.”
Asking the right questions, she realized, would have naturally slowed that runaway train down and given her the time to process this life-changing decision and assess whether or not she was ready.
If you are thinking about buying a home, here are four questions to ask yourself before signing on the dotted line:
1. Why am I doing this?
Many think that owning a home is the crowning achievement of a successful life, but are you buying a home for the right reasons? Buying a home is a life-changing decision. Not only does it typically lock you into a 30 year mortgage, but you are also locked into a geographic location and you may even be locked into a specific job or industry because it will now take that level of income to make the mortgage payment.
Make sure that you are ready for all of this. Buying a home should not be a snap decision based on what age you are, how much money you are making, or to show that you are successful.
2. Do I have an emergency fund?
This should go without saying, but you should have your financial life in order before you buy a home. Are you going to use all of your savings for the down payment on your home? If so, you may not be ready.
Buying a home should not wipe you out financially. Once you purchase a home, a lot of your expenses will increase immediately; you may find that you have higher utility bills, and you may need to buy furniture or invest in landscaping. It will be even more important to have an emergency fund and savings outside of what you are using for your home.
3. Can I afford more than the mortgage payment?
When buying a home, there is always a focus on the down payment, mortgage interest rate, and monthly mortgage payments. But there is more to owning a home than simply the mortgage payment.
For example, shortly after I purchased my home when I lived in Washington, DC, I was on my way to the basement to start a load of laundry when I stepped down into ankle-deep water. Overnight, my basement had flooded. I had to pay to get the water pumped out of the basement and then waterproof the basement to stop any more flooding. That was several thousand dollars — more than my mortgage payment at the time. Issues of all kinds arise when owning a home, so you have to really be able to afford more than just the mortgage payment.
4. Should I rent a little longer?
This question can be a separate article all on its own, but it is one that you should ask yourself. There is no shame in renting. Actually, renting instead of buying can offer you flexibility in terms of location and monetary outlay. And with mortgage rates and home prices being what they are right now, if you find yourself stretching to be able to afford a home, renting might be the best option right now.