- Real Estate
Before you Buy a Home
There are some things in life that we live for, and one of them is home ownership. It is a tremendously exciting prospect to have your own home and one that you should strive for. But, before you can have the dream of home ownership become a reality, you need to have a plan in place. So, let’s take a look at some of the essential points to look at before you decide to buy a home.
How much can I Afford?
The very first parts of the plan we need to take a look at are your personal finances. You want to find out exactly how much of a home you will be able to afford without having to overextend yourself.
1. A mortgage payment should be no more than 1/3 of your total annual income.
When you are looking for a home, this is the most crucial aspect of finding a home you can afford. Take your totally annual income from the last three years and create an average. Once you have done that divide it into thirds. One third of that is the total amount of the monthly payment that you should stick with. If, you stick with that realistic number you will never being in danger of over extending yourself for your home.
2. Check your Credit
Once you have established the amount of the home you can afford the second most valuable thing to check is your credit score. Pulling your credit to see if it is accurate and free from mistakes can dramatically influence your home purchase. Lenders look at your credit score to determine interest rates and risk. So, before you even start looking make sure your credit reports are in order.
How long will you live in your home?
1. Plan to stay in your home for at least five years
Before shopping for a home make sure that it is a reasonable prospect for you to undertake. If, you are planning on moving in a couple of years to another location then why not just continue to save money until you get there to purchase a home. Having a home is an extremely large investment so plan on staying in it for at least five years so that you will have created some equity in the home.
Getting a loan and knowing the local Market
1. Before, you start shopping with a realtor for a home it's always an excellent idea to get preapproved for a specific amount. This does a couple of things that can give buyers an edge when they find their perfect home and are ready to place a bid on it.
a. It lets the realtor know you are ready to look and decide on a home
b. It tells the sellers you are ready to buy now
c. It allows for faster final contract negotiations
Having just those three positives on your side as a borrower; really give you the leg up as potential buyers to sellers because they will look at your bids more seriously than someone who is not prepared.
1. Once you have completed the prerequisites above then, the last step is to shop around for the perfect dream home.
a. Always check Neighborhood prices and comparable homes
b. Compare footage and amenities in each home
c. Check local taxes for each home
d. Always submit your bid with concessions and a 24 hour time limit.
Information is truly a home buyer’s best friend. So before, you decide to buy always have as much information as possible. If, you have questions do not be afraid to ask. The only dumb question is one that is not asked. So, have fun searching and getting your new home but come prepared and it will be a lot smoother process for you.