Three "Must-Knows" Before Buying A Home
Consider Wants vs. Needs When Choosing a Home
Unless you are building your own home, it's unlikely you'll be able to make every dream on your “wish list” come true. You will have to prioritize the things you need in your home versus what you want, which looks different for every homeowner.
If you’ll be selling this house at any point in the future, you’ll want to take the resale value of any potential home into consideration. Make sure you think of all the possible factors that impact resale value. It’s also a good idea to think about it in terms of things you can easily change. 34% of homeowners with regrets about their homes said they regretted not purchasing a larger home. You won’t be able to increase the amount of square footage in your home once you purchase (without a major remodel), nor can you change where your home is located — 8% of buyers regretted choosing a home with a long commute. Take your time, make a check list, and understand your wants from your needs.
Buy a Home You Can Afford
A home isn’t just a way to switch out your rent for a mortgage. A home is a huge commitment, and if the timing isn’t right, it can become a huge mistake! Before you begin searching, you'll need to get pre-approved for a mortgage. If your credit score and debts aren’t ideal, you may want to consider paying off some of your debt, improving your credit score, and saving more money before you purchase.
When you get preapproved for a mortgage, make sure to look at your budget and figure out how much you can spend a month, so you can look at the right price range of houses. It’s also important to remember your monthly payment is divided up between 3-4 things, depending on the mortgage you get. Part of it is paying off the principle of the home (the money you borrowed) and the interest (a percentage of the money you borrowed as a fee you owe the lender for borrowing the money). The rest mostly includes paying the annual property taxes and insurance. Not to mention, owning a home isn’t just paying that monthly payment, which brings us to the last "must-know."
Prepare for ALL Aspects of Home Ownership
Making sure you can afford to purchase a home is affected by how well prepared you are for home ownership. You no longer have the ability to call a landlord when something stops working. Instead, whatever breaks is now your problem to deal with. Also, don't forget about the upkeep and maintenance of a home. It’s important to factor ALL expenses into your budget. Most homeowners spend between 1-4% of a home’s value each year on repairs and maintenance. This is why when you’re looking at different homes, it pays to pay close attention to details inside and out. All homes are going to have problems, even brand-new ones.
As you are buying, remember that it's a real possibility that there will be things that need to be repaired that weren't pointed out in your home inspection. A home is an investment, and that includes being prepared for surprise costs when you need to fix parts of the home that aren't holding up.