Now that the country seems to be slowly coming out of the recent economic turmoil, many people are thinking about buying a home. For people getting into the housing market for the first time or returning to the market after past economic upheavals, figuring everything out can seem daunting. To that end, we've gathered up some of the most important things to consider before you buy a home, during the buying process, and to keep in mind once you’ve become a homeowner.
Before you even start looking at homes, talk to your spouse or partner about what features are important for your, how much you can afford, and how much you intend to have for a down payment. Getting priorities straightened out before looking at homes or seeking a quote on a mortgage can keep buyers from getting swept up in the hype of home buying. Be practical and grounded.
Start by thinking about what kind of a home best works for you. Most people think about traditional single family houses when it comes to purchasing a home, but other people might find that a townhouse or condo suits their needs better. In addition to home type, buyers should think about what they want in a home and which features are the most important. Maybe it’s a neighborhood with a good school or having a certain number of bathrooms because you don’t want to share. Making these decisions early can save trouble and limit impulse buying later on.
Next, buyers need to think about—what else?—the finances. A good rule of thumb is for the down payment to be 20% of the house’s cost. Paying more upfront can save a lot later because mortgage interest does add up! It’s also a good practice to see how much a lender is willing to offer before looking at houses. Sometimes buyers think they can afford more than lenders are willing to give them, so speaking with a loan officer first can be beneficial. However, sometimes banks are more generous than anticipated! Don’t use getting a bigger loan as an excuse to buy more house than you really need.
Even with the best laid plans, buying a home can be stressful! Searching for the perfect home may take some time, but the process is much eased by the involvement of a real estate agent. Real estate agents know where to look and how to bargain and can be immensely helpful in the home buying process. Once buyers have selected a home, the next phase is to look into how much money they have to pay for it. This should include that 20% down payment, a mortgage offer from a bank, and possibly funding from state sponsored programs that help people get into homes.
After weighing all the financial issues, buyers communicate an amount to the real estate agent who makes an offer to the sellers. The agent also participates in any counter-offers or negotiations and lets the buyer know when an agreement has been reached. At this time, the home enters escrow, during which it is recommended that the buyer obtains a home inspection and, potentially, closes the deal. It is important to have the home inspected by a trained professional because he or she may uncover some safety issues or flaws that were not apparent from the original offer. If everything looks good, the buyer moves forward and closes the deal.
It seems like the work should be done once a house has been purchased, but unfortunately, there is always more! A house needs regular maintenance, which includes fixing problems, upgrading old fixtures or appliances, and maybe even remodeling to suit your needs. Finally, just because you’ve bought a home doesn’t mean you should stop saving money! Save up for those home expenses in advance, to avoid being taken by surprise later.