As you hunt for a home, review these helpful and practical homebuying tips to avoid potential pitfalls.
Homebuying is simultaneously one of the most exciting, frustrating, emotionally draining and ultimately satisfying endeavors you can go through. But if the thought of minimizing the frustration and exhaustion to make your homebuying journey more pleasurable appeals to you, you may want to keep these homebuying tips in mind. Who knows, you might even want to do it again and again.
Create a checklist
Whether you are buying for the first time or an experienced shopper, homebuying is an emotional process. Have a list of items, amenities and desires to check off as you weigh prospective houses. Check them off as you inspect a home and assess how each home stacks up against the others. This way, you can be more practical about your decisions and less emotional
Know what you can afford
There are a number of rules of thumb to follow to get to the bottom of how much you can afford. One suggests buying a home no more than two-and-a-half times your annual salary. Another says a safe formula is that home expenses should be about 25% to 30% of your monthly income. Fortunately, there are a number of online calculators that can help you determine how much home you can afford.
Strengthen your credit score
The higher your credit score, the lower your monthly payments will likely be. A few months before you begin shopping for a new home, get a copy of your credit report and make sure your credit history and current liabilities are in good order.
Get preapproved for a mortgage
Nothing is more frustrating than finding the right home and losing your chance to make an offer because another buyer with financing in place sweeps in and nabs it. Remember, there is a difference between being pre-qualified and pre-approved for a mortgage. And do your research about potential hidden and junk fees, processing fees and points.
Create an emergency fund
Having cash readily on hand, whether with an available line of credit or a healthy savings account, is always a good idea, but it is especially important when you enter the world of homeowning. Set up an emergency fund or access to a line of credit to handle unexpected expenses, both home-related and non-home related. Maintenance costs, minor to major repairs, utility hookups and general enhancements when you move are just some of the inevitable expenses you will encounter during and after your move-in. Have some cash ready to cover them.
Budget like a homeowner
Home expenses don’t end with your mortgage principal and interest payments. Taxes, insurance, lawn care, utilities, homeowners association dues, and even the cost of commuting to work may all be new monthly expenses for you as a homeowner. Create a budget to make sure you can afford to live in the house.
Make sure you like the house
Even the best laid plans to buy a house and sell it again quickly can go awry if the housing market, economic environment or even personal employment changes drastically. In the end, you may discover it is best to stay in your new home longer than you planned, and that can seem even longer if you don’t truly enjoy the place. Buy what you like and it will make the decision to stay easier.
There are, of course, many more aspects to homebuying to consider, but these tips may help you navigate the logical and even emotional challenges you will likely face. In the end, buying a house can be a satisfying and life-affirming activity because in the end it should feel like home after all