To buy a home requires a major time and financial commitment. Take the time before you begin your search to ask yourself critical questions that will reveal your real estate preferences and goals, allowing you to structure, efficient, and organized your house buying search.
1. What features in a new home are most important to me?
Light? Space? Views? Accessibility? Is there a yard? Is it close to schools, parks, or your gym? Do you have a preferred arrangement for your floor plan? Will you require a third bedroom? Is there enough room for storage? Parking? Do you give a damn about your pleasant neighbors? Is it possible to live in luxury? Monthly fees that are low?
The variety of amenities, services, and options available in homes can seem endless. “Take the time to sit down and evaluate the home features that are most essential to you, and which ones you can live without before you begin your search,” Peta advises. Use this checklist to identify which properties are worth visiting and to estimate a reasonable price based on the facilities that are essential to you.
2. How Much Can I Afford to Spend on a House?
Before you buy a home, you should be sure you can afford it. Your monthly mortgage payment should not exceed 25% of your gross income. If you have no other debts, you can stretch this to up to 28 percent. If you’re taking out two mortgages, you’ll need to add your payments together to see if you fulfill the requirements.
Your total monthly debt payments, including your mortgage, should not exceed 33% of your gross monthly income. If you borrow more than you can afford, you risk losing your home, so be conservative. If the house you want is out of your price range, you might want to consider renting for a while longer or hunting for something more reasonable.
3. What should I put aside for a down payment?
When it comes to budgeting, the next issue to consider is how much money will I need for a down payment? If you have the cash, the answer is a resounding yes. To prevent a monthly mortgage that follows you around forever, it’s always a good idea to buy a home in cash or put down as much money as possible. Don’t be concerned about losing your tax deduction or making whatever “smart” financial decision your broke buddies encourage you to make. Trust us when we say that arithmetic isn’t on your side.
If you’re getting a mortgage, make a down payment of at least 20%. You’ll be able to avoid paying for private mortgage insurance this way (PMI). If that isn’t practicable, don’t put down less than ten percent. You’ll be killing yourself with extra interest and fees if you don’t. So, if you’re buying a $300,000 house, you’ll need to put down at least $30,000–60,000.
4. Do I want a ready-to-move-in home or am I willing to renovate?
If you take on a project, you must think about the financial and time ramifications. “How much time and money do you want to invest if you’re willing to renovate?” Ben adds. Is this true for all rooms, or are there some that are more significant than others? A new bathroom or kitchen is far less complicated, expensive, and time-consuming than a complete overhaul.” Taking on this subject now, while you have a clear head and no time constraints, will result in fewer headaches in the future.
5. How will I be able to pay back the loan?
Consider how long the loan will last. You can get a mortgage for 10, 15, 20, or 30 years. The longer the term, the lower your monthly payments will be, but the more interest you’ll pay over the loan’s life.
If this is your first house, you may be eligible for a government loan from the Federal Housing Authority (FHA) with a smaller down payment. These loans may also be useful for folks who have trouble obtaining authorization from traditional lenders.
You should not be purchasing a property if you are financing with an ARM (adjustable-rate mortgage). Your interest rate will rise, causing your payments to rise as well, making it harder to stay up. It’s possible that your equity will not develop quickly enough to allow you to refinance before the rate changes take effect.
Do your homework on the many types of homebuyer loans to ensure that you get the best financing choice for you.
6. Do I Have Connection to a Good Realtor?
A good real estate agent can make a significant difference in the ease with which you can search and purchase a home. They must be willing to learn about your wants and needs, and they must be well-versed in the local market.
Make sure they’re a good fit for a realtor before you hire them. Interview the real estate agent and have a list of questions ready to make sure they can match your requirements.
Let’s get started if you already know the answers to these questions.
