Buying a home is no easy task. As Real Estate professionals we’ve seen our fair share of all aspects of the home buying process from the perspective of a buyer, seller, an agent, and an investor. We’ve learned many lessons along the way. As seasoned professionals, we’ve come to understand that in real estate as well as in any other business, it’s very important to arm yourself with knowledge and to ask the right questions.
Home buying has many facets. One of the most important factors in your home buying success is whether or not you are actually ready to buy. There are many people who pursue buying a home without being prepared. Unfortunately, they set themselves up for disappointment down the road when they find out they might have to wait longer than they expected for an unexpected reason. One of the ways that you can begin to plan for purchasing a new home is to ask yourself these six critical questions, and then to react to whatever the answers are to those questions.
Can I afford the payment?
The first question you must ask yourself is whether you can actually afford to buy a home. If so, how much house can you afford? Looking at homes can be very exciting, but finding out you can’t afford the house you’ve set your sights on or worse, getting into a home where the mortgage is financially overwhelming can diminish your quality of life. That’s why it’s more beneficial to find out ahead of time what is in your budget or if buying a home is in your budget at all.
There are two fairly prevalent guidelines for determining how much you can afford to pay when purchasing a home. The first of these guidelines recommend that you spend approximately twice your annual income on a home, while the other recommends that you don't exceed 30% of your total monthly income on a home purchase. Of course, the second of these two guidelines will require that you calculate your mortgage payment so that you'll know how that figure stacks up against your monthly income.
There are many factors to consider when determining if a particular home is in your budget and it’s not just looking at the asking price. There’s interest, mortgage insurance, taxes, and other elements that factor into a mortgage payment as well. Feel free to use our mortgage calculator to get an estimate of what your mortgage might be for a particular home. Keep in mind that you will have to pay taxes on the new property, and these can be calculated by researching the property tax information for the county where the house is situated. You'll have to add in a homeowners insurance to the total, and your real estate agent should be able to give you a ballpark figure on that. Once you've subtracted your down payment from the cost of the home, you should be able to calculate your monthly mortgage after applying the interest rate on your bank loan. When you have an approximate monthly figure for your mortgage payment, you should make sure that that figure does not exceed 30% of your total monthly income.
Can I live here for the next 5-10 years?
Buying a home is an extremely large purchase. It’s possibly one of the biggest transactions you’ll make in a lifetime. So making sure you get the right one is a top priority. Additionally, real estate is a long-term investment. Markets change. Prices go up and down. You never know what the market will do, and the last thing you want is to end up in a home or in an area you don’t really like and find out your home is worth less than what you paid for it. Being able to commit to a home long-term is the best case scenario.
Does the home fit my requirements?
The perfect home is one that best meets your requirements. In fact, before you even start looking for a home, it’s wise to put together a list of what you’re looking for in a home. That way decision making will be a lot easier. If you’re buying with a spouse, it’s best to sit down together and come up with all the things you want in a home. When you find a home that fits your budget, make sure it also fits your preferences. Your preferences are important too!
The best approach to determining kind of home that you really want when you are researching South Boston homes is to make two lists, one of them being a must-have list, and the other being a nice-to-have list. On the must-have list, you should determine whether you're looking for an actual house, a condo, a duplex, an apartment, or something else. Whatever dwelling you choose should fit your current lifestyle, and the lifestyle you anticipate for the next several years.
You should also consider the kind of neighborhood you want your dwelling to be in, and the proximity of essential services such as groceries, schools, workplace, entertainment, and possibly sports centers. You should be aware of the crime rate in any neighborhood you're considering, and what the cultural life is like in the area. Generally speaking, you should limit the must-have list to essentials, and allow the nice-to-have list to grow a little longer. This will be a good guide to test each potential candidate against when you start house shopping.
What kind of maintenance or additional work will it need?
We mentioned earlier in this post about making sure you can afford the home. The other side to that coin is making sure you can afford any potential repairs or updating the home might need in order for you to move in. Additionally, there are other maintenance costs you could potentially inherit with the house such as lawn care, homeowners’ association fees, home insurances, pesticide treatments, etc. Can you afford these additional costs? Are you able to facilitate any needed repairs? It’s extremely important to be well prepared when it comes to this aspect of the home buying process in order to avoid being blindsided.
Am I ready to make the purchase?
One of the biggest factors in answering this question is what your credit score is, and how much debt you are currently carrying. If you have too much debt at the moment, it would be advisable to take six months and pay off some of that debt load before proceeding with your home purchase. Another factor in your preparedness is how much of a down payment you could put on the house, and this can be very significant because it will influence how much you have to borrow to finance your purchase. When you feel that you are in pretty good shape for purchasing a home, you should ask a loan officer to pre-approve you for a loan amount which you can actually afford. This will give you the confidence to know that you are ready to purchase a home, at least in the price range specified by the pre-approval.
How can I make the most effective bid?
For this part of the process, the services and experience of a real estate agent can be invaluable. Agents will be aware of bids on homes in the neighborhood where your prospective house is located, and they will know which bids were successful and which ones weren't. An agent will also help you avoid making a bid that's too low, or offering way too much on a specific property. If it turns out that your bid is ultimately rejected, a good real estate agent can keep you in the game, and help you prepare for the next bid.
If you are ready to purchase a home, it’s time to contact your realtor! We’d love to help you with your next purchase. Contact Home Town Brokerage today and let’s get you in your dream home.