Buying a home is a big responsibility. it’s a huge investment that requires planning and thought in order to be sure you make a sound decision. Buyer’s remorse is not something you want to deal with down the line. There are a number of things to think about prior to setting out on the house hunt. Keep these tips for what to consider before buying a home in mind as you begin your search.
Credit Score
Your credit score is an important indicator of how much home you can qualify for and at what interest rate. Depending on your score, it’s possible you might not qualify for a mortgage at all. It can be intimidating to look into your rating, but this knowledge is crucial to understanding how far you can go in the home buying process. If your number is less than you’d like, take steps to improve your score so that you can feel more confident when buying a home.
Your Budget
Your housing expenses should be no more than about 30% of your monthly gross income. This includes your mortgage payment, property taxes, and homeowners insurance. Understanding your debt-to-income ratio is also important. This amount is what goes toward your debt obligations, and it should be less than 35% to qualify for most mortgages that provide good terms. Less debt allows you to budget for unexpected or emergency expenses that may come up.
Down Payment
Your down payment is how much money your financial institution expects upfront for your home costs. Traditionally, this has stood at approximately 20 percent. However, lenders offer a variety of programs with various down payment requirements. If you’re a veteran, for example, you may be able to get financed with significantly less money down. Rules on VA loan limits have changed recently. It’s even possible that you may qualify for a no-down payment loan. General programs exist at some institutions for non-veterans that can provide lower interest rates, down payment assistance, or help with closing costs. It’s a good idea to shop around for a lender that is reputable and who is able to work with your specific needs.
Local Real Estate Market
Among the things you should know when buying a home is what the real estate market is like in your area. This is something that can easily be overlooked to a home buyer’s detriment. Take time to browse real estate listings to see what the going price is for properties you find appealing in your desired neighborhoods. Talk to real estate agents to determine how competitive your market is. Knowing this information in advance will help you to understand what you’ll need in terms of financing and what kinds of obstacles you may be up against.
Preferred Location
As they say, “It’s all about location, location, location.” Where you decide to live truly does matter. If you have children, you may want to be in a particular school district. Perhaps living near public transportation matters to you. Many homebuyers insist upon living within an easy commute of their work. Others want to be within walking distance to shopping and recreation. Do you want to live in the country, suburbs or city? Take some time to compile a list of your neighborhood priorities. This information will be crucial to guide your home search.
Home Wish List
Now comes the fun part. What kind of home do you want? There’s an awful lot to consider here. You’ll want to determine the approximate size home you desire and the number of bedrooms so that you end up with a dwelling that has enough room for you. Don’t forget to take future needs into account. If you plan to grow your family, you’ll want to choose a larger home. How many bedrooms do you need? Is one-story living preferable or would you prefer to spread out onto multiple levels? Consider the preferred layout. Open floor plans are great for entertaining. Having bedrooms next to each other is helpful if you have small children. Write a list of your priorities and your deal-breakers.
These tips should get you started on your home buying process. Understanding what you need to do before buying a new home will save you a great deal of time and aggravation. It will also help you to enjoy the experience more.
