mortgage payment. Many people don’t have all the numbers. Additional fees are necessary to make a fair comparison: principal interest, property taxes, property insurance, and ongoing maintenance. Are you prepared for the down payment? This lump sum payment funds your equity in the property (how much of the property you own). Down payments vary; 20% is preferred and gets the best rates. Some loans allow down payments as low as 5%. Sometimes relatives help with the down payment. If you have a choice, take a gift rather than a loan because lenders will add the loan debt to other monthly obligations and potential mortgage payments to determine your debt-to-income ratio, which generally can’t top 43% to qualify for a home loan. Can you afford the monthly mortgage and its components? Generally, a mortgage includes the loan principal and interest plus property taxes. These items can affect the monthly loan-only payment by several hundred dollars. Are you emotionally ready? Can you handle the stress? A significant factor to consider when buying a home is stress. The Holmes and Rahe Stress Scale, a landmark stress study, ranks many events that accompany buying a home in the top 43 most stressful circumstances in life. Four events are specifically home- related: change in financial state (No. 16), large mortgage or loan (No. 20), change in living conditions (No. 28), and change in residence (No. 32). If someone has recently made other life changes, such as marriage (No. 7), switching careers (No. 18), or having a child (No. 14), it might be wise to postpone buying a home. Stress overload can lead to missed payments, destroying credit, or even losing the house. It’s better to rent if your life is in flux and buy when your stress levels are lower. Are you ready for commitment? Are you prepared to make many decisions, from picking a real estate agent to picking paint
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