So You’re Ready To Buy A Home?
Home ownership means you no longer pay monthly rent for the place you are living. You can do what you want with your house, within reason. When you leave, you can sell it to recoup the purchase price and – with any luck – earn a profit too. But home ownership comes with some disadvantages and responsibilities. So consider whether your lifestyle and finances make home buying a smart move. For most buying a home is a great personal and financial decison.
Let’s do a checklist on what you need to do to make your process go as smooth as possible.
Let’s start with seven things you should know when buying a house.
1. If You Can’t Stay Put Don’t Buy.
If you can’t commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner – even in a rising market. When prices are falling, it’s an even worse proposition.
2. Get Your Credit Right.
Most likely you will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. Months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover. Having at least a 620 score or higher increases your chance of obtaining a loan.
3. Get Pre-Approved.
Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.
4. Save for a downpayment.
Save money for a down payment on your home and the different expenses, both known and unknown, that will arise between starting the process and closing on your home. There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price. Once you’ve considered the down payment, make sure you’ve got enough to cover fees and closing costs. These may include loan fees, inspection fees, and the cost of a title search and can often run to 5 percent of the mortgage amount. Closing costs can also be paid by the seller of the home if agreed.
5. Look for what you can afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you’ll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.
6. Get A Professional to Help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.
7. But in a good location with good school districts.
Location is key when buying a home. With children or not, when it comes time to sell, you’ll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.
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