Buying a house, for most people, could be the most significant investment you’re ever going to make in life. In most cases, you’ll be spending over ten years paying the mortgage, after saving for several years to raise the down payment. By the end of the day, you may find that you spent a whole 15 years just working to own that home.
It is with this in mind that we created this beginner article to help first-time home-buyers get through the process without making costly errors.
1. What types of home best suits your needs?
First-time home-buyers have several options when purchasing a home; condos, townhouses, multi-family properties, traditional single-family houses, and so on. Be extremely careful when making your pick lest you choose a house that is unnecessarily too big or too small for your needs.
Another idea you may consider is buying a fixer-upper for a low price and doing the necessary remodeling. But keep in mind that fixing a home can be very expensive. Also, it needs a lot of time.
2. What specific features should the ideal home have?
Different first-time home-buyers have different needs. Some prefer quiet neighborhoods away from noise. Others may also prefer a particular type of bathroom, kitchen layout and garden.
These preferences mostly depend on our personalities, our work lives, and our family needs. Identify your preferences in advance. This way, home hunting becomes easier.
3. How much home can you afford?
If you pick a home that is too expensive for you, you may end up in financial disarray and could potentially default on your payments which can, in turn, hurt your credit score.
The first thing to consider is how much down payment you can afford. Keep in mind that the lower the down payment, the higher the interest rates.
Secondly, how much regarding monthly payments can you afford without compromising on your other financial obligations?
Lastly, how much money are you prepared to commit to insurance and regular maintenance? When you add up all these, you’ll know how much home you can afford.
4. How much mortgage do you qualify for?
Unless you’re planning to buy through cash, you’ll need a mortgage. Mortgages come from lenders. And lenders are mostly banks though many other financial institutions also give out loans.
When you apply for a loan, you’ll quote how much you’d like to borrow. But ultimately, it is the lender that will decide how much to give you.
Before you start hunting for a home, find out how much different lenders would be willing to give you. This amount will provide you with a rough idea of your limits.
Why, because you can only buy a home within the quoted amount.
5. Will you need an agent to help you with the buying process?
It doesn’t have to be an agent. You can also hire a realtor or a brokerage company to help you find the best deal. If you choose to go this route though, beware of the pros and cons.
Agents can help you find some of the best homes in the neighborhood. They can also help you make an appropriate offer and may also be on standby to assist with negotiations.
They also help with mortgage applications and completing the necessary paperwork. But they are not you. They don’t really know what you desire. So, you must know how to deal with agents.