When shopping for your new home, it’s important to take your time and think carefully. Choosing the right place to call home is a big decision, but there are some things you can do to feel more confident about your purchase. Here are some tips to help empower you on your homebuying journey.
Build a Realistic Budget
Start your homebuying journey with a strong foundation. The first step you take, before you even look at homes, is to build a realistic budget that works for your household. Your anticipated mortgage payment isn’t the only factor to consider when creating your monthly housing budget. Some of the costs you’ll want to factor into your budget include:
• Homeowner’s insurance
• Regular maintenance
• Homeowner association fees
A good rule of thumb to follow is that total expenses of homeownership should land between 25% to 35% of your monthly income. Building a budget that takes multiple different factors into consideration will help ensure you stay within that range.
Just because you are approved for a certain mortgage amount doesn’t mean you have to spend that much on a home. If you’re on a tight budget, aim to spend less than the amount you’re approved for. Homeownership can be an empowering move, but not if it comes at the expense of your overall financial stability. Don’t start eliminating important budget items like savings (which you might need in an emergency) to make homeownership a reality.
Understand the Ins & Outs of Your Mortgage
Before you close, make sure that you understand the terms of your mortgage, including your monthly payments, interest rates and possible mortgage insurance. Work with your Mortgage Advisor to understand exactly what to expect in the months and years to come.
Be Thorough and Informed
When touring houses for sale, keep an eye out for the fine details. Open closet doors, shine a flashlight in dark corners of the attic and take a look at the ceilings. If you notice any signs of wear or damage, point them out to your real estate agent and take pictures to show your Mortgage Advisor. Those potential red flags may warrant an extra inspection, which will be money well spent in the long run. They may also end up being a bargaining chip with the seller.
Don’t settle for a home with too many red flags, though. It’s okay to keep looking until you find the right place. Be patient—don’t let a hot housing market push you to move too fast. If you rush, you could find some serious issues with what seems like your dream home, like a neighbor whose ska band practices outdoors every night, or highway noise you didn’t notice during a busy open house. Your true dream home will be one that improves all aspects of your life. That’s something worth waiting for.
Plan For the Future
When you’re looking for a home, think about what a potential property might mean in the long term. Think about your life in 5, 10, 20 years, not just today. For example, do you plan to have a big family, but aren’t ready to start just yet? Starting with a smaller place now could provide the opportunity to generate rental income once your family gets big enough and needs to upgrade. Or maybe you’re thinking about moving abroad someday and want to keep a pied-à-terre where you currently live so you can visit friends and family. In that case, think about purchasing a small condo rather than a larger house.
Compromises like these are a typical part of the homebuying process. Many homebuyers start out the process thinking they want one thing, but end up realizing that another option might be better. In both cases, opting for a smaller place may seem like a sacrifice at first, but it’s actually just a way of balancing your current priorities with what you want for the future. You’ll also have more flexibility if your life pans out differently than you currently expect it to.
Ready to learn more about what purchasing a home looks like for you? Give me a call today! (503)905-4938