10 Smart Things To Consider When Buying A Home
Homeownership comes with a significant number of unexpected expenses. With the amount of money you're putting into your home, you'll want to make sure that you're doing all you can to ensure your new oasis receives the very best care. Regular maintenance can help decrease your repair costs by fixing minor problems as they arise and are more manageable. By starting an emergency fund, you won't be caught off-guard when these unavoidable costs occur. Just remember, the more educated you are about the home-buying process in advance, the less stressful it will be, and you will likely get the house you want for an affordable price. With that said, here are 10 Smart Things To Consider When Buying A Home
1. Know your credit score.
Qualifying for a home loan requires good credit. A credit score less than 580 would likely disqualify you for a mortgage. You can get your score from all three reporting agencies minimally once per year. It will help if you dispute any errors in your report immediately so they can be settled before applying for financing.
2. Shop the lender before getting a mortgage.
Even if you only qualify for one type of loan, a first-time homebuyer can and should negotiate with lenders to find the loan with the best options to accommodate their financial situation. Never feel obligated to do dealings with your current financial institution when searching for a mortgage.
3. Get pre-approved before home shopping.
In many scenarios, sellers won't consider an offer that's not followed by a mortgage pre-approval. You may think you can afford a $400,000 house. Still, banks may consider you for $250,000 based on determinants like a record of paying your bills on time and a debt-to-income (DTI) ratio. The amount of time you've been at your current job may also be a factor. Getting pre-approved (not just prequalified) gives you a leg up on the competition. Many realtors will not take on clients who haven't figured out how much they can afford to pay. A pre-approval letter tells the seller you're an earnest buyer and lets them know that the paperwork process will move faster if you are chosen.
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4. Know what you want.
You have several options for choosing the type of home in which you want to live. Try to see yourself living in the house, mentally making a list of must-have home features. Figure out the number of bedrooms and bathrooms, the square footage of the outdoor space, your preferred location, the home's layout, and the features it offers. It would help if you also considered the school district, how pet-friendly the neighborhood is, and how long your work commute will be. Online searches are excellent ways to determine which property best suits you.
5. Work with a realtor that knows the area
A good real estate agent should want you to feel equipped and familiar with all components of the home buying process. Buyers can find it helpful to have a knowledgeable realtor on their team. One of the best things you can do is ask your realtor questions about buying a house. It may be a good idea to find out if new construction is arising in the neighborhood, such as parks and restaurants. This may help add immediate home equity, which will be advantageous if selling in the future.
6. Don't stress over the cosmetics.
Many cosmetic nuisances can be changed or fixed to meet your likings; thus, it shouldn't be a major determining factor when looking to purchase a great home. Look for homes that need minor repairs if you are on a budget. If you can't afford to replace things like wallpaper and paint, it may be worth the wait to live with it for a while. Do your best to overlook the lousy landscaping and old carpeting. Don't let cosmetic blemishes turn you away from a home that checks all the essential boxes.
7. Buy what you are comfortable paying for
Just because you are approved for a $400,000 loan does not mean you should borrow that much. Always take into account the additional moving expenses and closing costs needed during the purchasing process, as these contribute to the overall initial expenses of home-ownership. Buying a home can require you to make difficult personal sacrifices. Only after making your monthly mortgage payments should you consider auxiliary expenses such as utilities, holidays, and entertainment. Plan meticulously, and never make a habit of pulling cash out of your down payment or emergency fund. You never know when times will be hard. You will be thankful that your savings are there to fall back on.
8. Know your furniture plan and monitor your financial situation.
Having a separate savings account for furniture can help create a less stressful process for furnishing your new home. Identify whatever essentials are missing, starting with big-ticket items like sofa and bedroom sets. Sectional sofas can make a home feel fuller without breaking the bank. Functional pieces like large rugs can help spaces look fuller, while drapes can be another affordable way to soften up a space. For those on a tight budget, affordable furniture can be purchased from thrift stores, Facebook Marketplace, Craigslist, and additional online sites. Of course, you can't get any cheaper than hand-me-downs from family and friends.
9. Use a reputable home inspector.
Dig more in-depth during the inspection. Even if the home in question appears to be flawless, perform a thorough assessment. The last thing a new homeowner wants is to get stuck with unexpected repairs that may not always be visible at a surface glance. Once you start visiting homes in person, you should try to notice as many things as possible. Bring a notebook and take pictures. It would be best if you kept an eye out for structural defects and cracking. Turn on faucets and showerheads to check the water pressure. Try the light switches to check for electrical issues. Look at the roof and its surface quality, while remembering to pay close attention to the noise from neighbors and traffic. Reserve some cash for home improvements. You should also make sure any renovations were brought up to code and have an expert look for the presence of termites, asbestos, mold, and radon. Many home inspections can reveal severe defects that the seller did not disclose. In this case, you'll generally be able to rescind your offer and get your deposit back or negotiate to have the seller make the repairs or discount the selling price.
10. Purchase a homeowners insurance policy
Homeowners’ insurance will be needed before closing. Your lender may be able to help you adjust your policy so that the policy is factored into your monthly escrow account. Homeowners insurance can cover you in instances of fires, floods, or other disasters. Choose the insurance that covers the cost of replacing your belongings and provides enough coverage to rebuild your home if it's destroyed or damaged.
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