Buying a home can be challenging for first-timers. After all, there are so many steps and requirements that you may feel anxious about making an expensive mistake – but new entrants enjoy some unique advantages created to encourage them in this market.
Before buying your first home, there is a lot to consider, but don’t worry. We’re here for every step of the process. Read on, and know what to expect from this life-changing decision with helpful tips along the way.
Questions to Consider Before You Buy
After you’ve decided what your long-term goals are, it’s essential to look at homeownership in the context of those plans. Perhaps embracing a Mortgage can help transform all that wasted rent money into something tangible.
Buying a home can be an excellent investment. It’s essential to narrow down your big-picture homeownership goals so that you know the direction they need to go without getting lost or confused by too many options.
Here are questions to consider:
- How’s your financial health?
Before shopping for a home, be sure to do your research and have an idea of what you can afford. You’ll also need to consider all the expenses that come with owning one – especially mortgage payments. The outcome of this audit will tell you whether or not it’s time to take the next big step.
Follow these steps:
Look at your savings.
Don’t even consider buying a home before you have six months of living expenses set aside. There will be considerable up-front costs, including the down payment and closing costs that come with it. You need money for emergencies and to save up to put your expenses on autopilot. Lenders might require this too.
Review your spending.
When it comes time to buy a home, one of the most important aspects is knowing how much your monthly housing costs will be. If applicable, you need this number for affordable payments and other factors like budgeting (utilities/food) or retirement savings calculations. Be sure not just calculate based on the mortgage but consider all expenses related, so there isn’t an unexpected cost surprise down the line.
Check your credit.
You’ll need to have good credit, pay on time and keep the maximum debt-to-income ratio at 43% or less. For loan seekers, it’s essential to keep in mind that lenders these days prefer a borrower with less of their monthly gross income going towards mortgage-related costs. The percentage varies widely depending on the local real estate market and can be between 15% all way down to 0%.
- Which type of home will best suit your needs?
When purchasing a residential property, you have several options: from single-family homes to duplexes, townhouses, and condominiums. You’ll also find co-ops available in some areas that allow you the chance to live locally while still having access to owning your own space.
There are many different properties that you can buy as a homeowner. The type will depend on what your homeownership goals might be, and there’s no one-size-fits-all answer, but each option has its pros and cons depending on this decision-making process when looking at them in detail.
If you’re looking to save on the purchase price in any category, a fixer-upper is your best bet. The amount of time and sweat equity required will take more than expected, but it can turn into what dreams are made out of if done right. If you are planning to do a remote job, perhaps having a new home can be something to you. Follow our website for more work from home tips and home ideas.
- Which specific features do you want your ideal home to have?
While it’s good to retain some flexibility in this list, you deserve an experience that fits both your needs and wants as closely as possible.
Your dream house is not just about what you want, but also how much space and where it should be located. To help with this decision process, we’ve broken down the different areas into three categories: basic desires; more minor details such as bathroom layout or kitchen appliances (e.g., refrigerator); then more prominent aspects of location preference that are more specific, like proximity to public transportation routes.
When you’re looking to buy or sell a house, the last thing on your mind is figuring out how much something will cost. But we as consumers must do our research before making such an investment–scanning real estate websites can help us get a sense of pricing and availability for properties offering features that are most important to us.
- How much mortgage do you qualify for?
Shopping for a mortgage can seem like an intimidating process, but it’s essential to know how much money you might be approved before starting. Your lender will consider factors like your debt load and monthly income when deciding whether or not they want to give the green light on their home lending pipeline.
In addition, many real estate agents won’t spend time with clients who haven’t clarified how much they can afford to spend.
Make sure to get pre-approved for a loan before offering any property. In many instances, sellers will not even entertain offers unaccompanied by mortgage approval from lenders; this is especially true in today’s tight housing market where interest rates remain historically low, but demand has increased exponentially.
- How much home can you afford?
What should you do if a bank offers to lend you more money than what’s needed?
A lot can happen in the world of finances. You might find yourself with an offer from your mortgage company for up-to-$300K on houses, but before signing anything, think hard about whether this is good news or not.
Many first-time homebuyers make this mistake and end up “house poor” with a bit of leftover after paying their monthly mortgage for other costs, such as clothing utilities. It can lead to more significant problems in the future if not corrected soon enough because those expenses will add up faster than expected.
You’ll want to look at the house’s total cost, not just the monthly payment. Consider how high property taxes are in your chosen neighborhood and what homeowners’ insurance will cost when you add those expenses into account for mortgage-related items.
Key things you need to know before buying a house
Consider what you can realistically afford.
Think of it as financial foreplay. Before looking for a home, take the time to understand how much money is available and where it’s going every month to figure out what kind of mortgage might work best.
Factor in silent or forgotten costs
- Council rates
- Stamp Duty
- Lenders Mortgage Insurance
- Additional Insurance
- Loan Fees
- Building and pest inspections
Research, research, research
It is essential to be prepared when you purchase a property. Start by narrowing down what areas of interest or neighborhoods appeal the most, and then have an eye on recent sale prices history in those parts of town before looking at suburbs that may be more expensive due to their location (but also offer better schools). Talk with local Real Estate Agents about market trends near your desired destination, as this can help guide future decisions on where to buy.
It takes time and effort to find the perfect new home. That’s why we have put together this list of tips for your next house-hunting adventure. If you are consider buying a new home, these can help give you some pointers on what to look out for and how much money you need upfront. We also cover financial considerations for purchasing a property, so be sure to read through our guide before jumping in headfirst. Stay tuned to our website for more home-related articles like home buyer tips and DIY housework for your new home.