- To Buy Or Not To Buy
- Choosing Your Real Estate Agent
- Finding Your Home
- Offers, Inspections & Escrows
- Moving In
Purchasing a home is probably the biggest financial decision you will ever make. Whether this is your first purchase or you are moving on to a different home that better meets your needs, this decision must be made carefully. That’s why we’re providing you with a first time home buyer’s guide to get you started.
Why do you Want to Buy?
Before you make a big decision, consider why you want to buy a home. Are you tired of paying rent? Have you outgrown your current home? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? When looking for your new home you should be looking to upgrade your living experience, so having a clear sense of why you’re moving will help you make sure those needs are met in your new home.
Can you Afford to Buy?
Homeownership can be a very good investment. As you pay down the principal part of your loan, you are building equity over time in addition to any market appreciation on your property.
A few things to consider are:
- Has your income grown?
- Do you expect a change in income in the next 5 years?
- If you were to experience a pay cut, would you be able to afford your mortgage?
- Mortgage Interest
- Homeowner's Insurance
- Property taxes
Experts recommend spending between 33-40% of your income on housing. The tax benefits of homeownership can provide a considerable advantage over renting, but you have to make sure a home purchase is something you can handle in the long run. The big number you see listed next to your potential new home is not exactly what you will end up paying, so make sure you do your homework about the additional expenses and what they will cost you. Buying a home is a long term financial commitment, so make sure you’re prepared for that before you buy.
What’s your Budget?
Budgeting is an important step in the home buying process so you can narrow down your options and not get in over your head. When budgeting, it’s necessary to factor in not only the “extra” costs detailed above but also the cost of any renovations or repairs that may be needed once you move in, in addition to the price of the home itself. A ready-to-go home that’s a little bit more expensive maybe a smarter buy than a fixer-upper that’s a little cheaper.
What’s the Local Market Like?
Before you even go searching for a new home, you should do some research on how much sellers typically ask for homes in certain areas. You should also look at other factors like how long the house has been on the market and if the price has been raised or lowered in the past. This way you will know how and when to negotiate on price when the time comes.