Five Things to Consider Before Purchasing a Home
Owning a home is part of the American dream and for many consumers, favorable interest rates and declining home prices make now the perfect time to buy.
1) Know why you want to buy. There are many advantages to owning your own home, including the building of equity and the potential tax savings. Current housing prices and mortgage rates may also make it more appealing. It is important to understand why you want to buy a home and why now is the right time for you.
2) Understand the big picture - what owning your own home really costs. It is easy to get so caught up in the excitement of buying a home that we don't take the time to investigate the real costs associated with purchasing and maintaining it. The down payment, closing costs, and insurance are all significant investments you will make before you even get to move in.
Once you move in, there may be repairs that need to be made or necessities that need to be purchased, such as appliances or window treatments. You may need to outfit your shed or garage with a lawnmower and other maintenance tools. If you live in a neighborhood with a clubhouse, a gated entrance, or other community amenities, you will likely have monthly or quarterly association fees. Utilities may be higher in your new home. You are now responsible for property taxes and homeowners' insurance. These can always be included in your monthly payment.
3) Identify what you need in a home. If you aren't prepared to make repairs or changes to a house yourself, you might consider a newer home. While you might not easily add another bedroom, don't ignore the perfect house because it doesn't have a fenced yard or swimming pool - these can always be added later. And you might even decide it's not even needed or maybe your real estate agent will help you identify a property that has what you need. If you have or are planning to have children, you might want to focus your search around a particular school or family-friendly community. Always ALWAYS make sure you get a home inspection. I was told today by a home inspector that he found potential issues with a brand new property that was built less than 3 months ago! So make sure you get a home inspection, regardless of how old the home is.
4) Shop for a loan. There are many different ways to finance your home, including fixed and adjustable rate loans and varying terms. Familiarize yourself with mortgage options and consider pre-qualifying for a mortgage before you start shopping. While you may qualify for a higher mortgage amount than you thought, set a payment limit that you will be comfortable with. If you haven't checked your credit report recently, now is a great time. ONCE a year MINIMUM you should be checking your credit, due to anyone can put anything on a credit report anytime. Make it part of your spring cleaning. Don't only spring clean your home, spring clean your credit. You can request a FREE copy of your report once every 12 months online at http://www.annualcreditreport.com/ or you may call (877) 322-8228.
5) Educate yourself on the home-buying process. There are many free pre-purchase counseling and homebuyer education workshops for consumers on the path to homeownership. You could be educated about the various mortgage options and what to look for in a lender/mortgage broker, and explore the tremendous benefits of home ownership, from stabilized housing costs and appreciation, to the many tax benefits.Some of these workshops are willing to give you a certificate to help you out with downpayment and/or closing costs.