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 be certain that you are ready to buy a new home.
1. What type of home do I want to buy?
It is important to take time to figure out exactly what type of home you want to buy. Home types can vary from a single-family, to multi-family homes including condos and co-ops. Your local market likely has many different options for sale in the area and it’s fundamentally important to choose the best housing type that fits your needs.
Deciding on the town or neighborhood you want to live in is just as important. While a specific home may have all of the features that 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 home can I really afford?
For most,the price of the home directly impacts the size of the monthly payment. A popular rule of thumb is that you should not spend more than 30% of your income on a monthly mortgage payment. Another way to look at it is that you can basically 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 what monthly loan payments would look like 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, it is wise to review your credit history to ensure sure your finances are in good standing. Always get copies of your current credit history report to ensure that the information is accurate. You will absolutely have to fix any credit discrepancies or payment issues that you discover.
It is likely that you will want to get pre-approved for a home loan first to familiarize yourself with current mortgage loan requirements. Most often a pre-approval from a lender is 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 with respect to 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 you can find may save you thousands of dollars and weeks of headaches and hassles.
Finding the answers to these four questions prior to starting your home search will likely make the home buying process more fulfilling and with fewer unplanned surprises.