Are you ready to pack your things and settle down in your dream home? Then get ready for the biggest financial decision of your life. There are many things to keep in mind and sometimes it feels like a million things could go wrong if you’re unprepared. From the moment you decide to go down this path to actual purchasing, there are several steps you should follow and things you should know.
You’ll probably think we’re crazy if we suggest keeping an open mind while also remaining firm. The bottom line is you shouldn’t let this decision chew you up inside. Being realistic about the market, your needs, and what you’re capable of buying will probably help you most. But avoiding distractions is equally important.
Here’s a list of things you should definitely know before buying a home.
1. Think Longterm
The best way to save as much money and to avoid headaches is to buy for the long run. Buying a home you want to live in for several years is very important. For starters, you’ll only have to go through the trouble of looking for one, paying a real estate agent and saving up once- if you find your forever-home, that is.
At the very least, consider living there for at least 5 years. Anything less, we think, is not really worth it. When looking at houses can you picture yourself happily sleeping, eating, raising your children and hosting friends in there?
2. Focus on What’s Important to You
The moment you decide to buy a home, pick up a pen and paper and write down your needs. Look around your current housing situation and ask yourself what you could live without or what you’d do anything to have just to make your life easier. Think about functionality first and then, if you want, add a column for things that you would like but don’t necessarily need.
Location is just as important. What kind of neighborhood are you looking for? Do you have young children you have to send to school or is that not something you’re interested in? Write everything down.
Let that list simmer for a bit. Put it aside for now and come back every once in a while until you feel comfortable with it. That’s the list you have to stick to. When it’s time to view houses you absolutely cannot be distracted by new, shiny stuff that hasn’t made the cut. The thing is, the market is pretty volatile now, so sellers are willing to hook you on anything!
If you do see something you think might benefit you ask yourself if you’ll still use it when the initial enjoyment wears off.
4. Set a Budget and Stick to It
On the topic of staying firm, the same goes for your budget. Since you know what you need (number of rooms, yard, location, etc) you could figure out, roughly, how much money you’ll need. The next step is to figure out how much you’re able to pay.
Of note is the fact that 29% of buyers go over budget, so figure out your margins too while you’re at it but otherwise, don’t sacrifice your financial stability on a house you simply cannot afford. Your budget is there for a reason, try to stick to it!
5. Aim for a 20% down Payment
Get ready to think about your down payment. Not only will a 20% down payment, which is the golden ratio, ensure you’ll have to make fewer offers, but it’ll also likely save you from private mortgage insurances. Monthly mortgage payments with PMI are not as scary as they once were, but a higher downpayment is well worth it still.
Ultimately, you don’t want to owe more than your house is worth. That just translates to a lot of money down the drain. That’s why this tip is so very important.
7. Get Pre-approved
Getting pre-approved is one of the best ways to show a seller you’re serious and that you’ve got a strong financial footing. This is also an important step to make sure you’re aware of your finances, of what you’re capable of buying and what you’re able to afford.
8. Shop Around for Mortgage Deals
An astounding 52% of buyers only consider one lender when it comes to mortgages. Considering the fact that this will probably be one of the biggest purchases of your life, don’t you think you should shop around?
You can save a lot of money, though you’ll have to put up with a lot of visits and telephones, not to mention a lot of browsing on the internet. At first glance, $40 or $50 a month doesn’t sound much, but over several years you could be saving thousands of dollars. Isn’t that enough to convince you you should do this?