For both first-time home buyers and seasoned real estate investors, buying a home can be both a daunting and exciting experience.
Since there are many factors to consider after you decide to buy a home before you begin a home search for the perfect property, ask yourself the following four questions to ensure that you are ready to buy a new home.
1. What type of home do I want to buy?
Determining exactly what type of home you want to buy is essential. Home types, including condos and co-ops, can vary from single to multi-family dwellings. Your local market likely has many options for sale in the area, and choosing the best housing type that fits your needs is essential.
Deciding on the town or neighborhood you want to live in is just as important. While a specific home may have all the features you’re looking for, other factors like crime rate and proximity to shopping centers may impact your overall home-owning satisfaction.
The best way to start this process is to make a list and prioritize your needs before you begin to search.
2. What price of a home can I afford?
For most, the home’s price directly impacts the monthly payment size. A popular rule of thumb is not spending more than 30% of your income on a monthly mortgage payment. Another way to look at it is that you can afford to buy a home that equals approximately two-and-a-half times your yearly salary.
Since affordability and home prices may vary in different areas, you may want to use a mortgage calculator to determine monthly loan payments if you bought a home today.
3. Am I financially prepared to buy a home?
Several months before you begin searching for a new home, reviewing your credit history is wise to ensure your finances are in good standing. Always get copies of your current credit history report to provide accurate information. You will have to fix any credit discrepancies or payment issues you discover.
You will likely want to get pre-approved for a home loan first to familiarize yourself with current mortgage loan requirements. A pre-approval from a lender is often based on your credit history, current debt levels, and monthly income. (Having this in hand will also put you in a much better negotiating position to make a serious offer once you find the right property.)
4. How do I negotiate the right price on a home for sale?
Research! Your opening offer should be based on data, i.e., the sales trends of similar homes within the same price range in the area.
Before making that opening bid, you may want to review the selling prices of comparable properties online. If local homes sold for less than the seller’s current asking price concerning the home you’re looking at purchasing, feel confident and offer your bid at a slightly lower price than what the home seller is asking.
Enlisting the help of the best local real estate professional may save you thousands of dollars and weeks of headaches and hassles.
Finding the answers to these four questions before starting your home search will likely make the home-buying process more fulfilling and with fewer unplanned surprises.