10 Things You Should Know Before Purchasing a Home
If you’re thinking about buying a home, there are many things that you need to consider. From the taxes you’ll pay to whether or not you’ll utilize a realtor, you have a lot of decisions to make. As your home is one of the most important investments that you’ll make, it’s important to consider all of the details.
1. Consider the costs
Consider all of the factors involved before you purchase a new home. There are many fees associated with homeownership, not just the purchase price of the home. You’ll have closing fees associated with your purchase. You’ll have even more fees over the years, from property taxes to maintenance and upkeep. The cost of living is a big consideration, with city life being more expensive than more rural living. Other cost considerations include transportation, goods, and tuition, so keep all that in mind.
2. Use a realtor
It’s a common misconception that using a realtor drives up the cost of a new home, but it’s actually the seller that pays the `commission for the realtor. As such, you’ll want one that protects your interest rather than using the listing agent, who will likely protect the interests of the seller and pocket both sides of the commission. A good realtor can navigate you through the home-buying process, as well as contract negotiations.
3. Remember buying involves a contract
You’ll have lots of documents to sign when you find your dream home, but don’t sign on the dotted line until you’ve read everything. While most of these documents are standard, there’s usually room for negotiation. Is there something you want to be included in the purchase? Spell it out carefully in the written contracts.
4. Think about all aspects of your dream home
When you’re buying a new home, you’ll want to consider the different aspects of where you’re going to be living. What is your long-term goal? Are you planning on moving or changing jobs? Is there room if you have children to grow as a family within the same home or will you have to move? Make sure that the house you pick is one you can grow with because it’s a pretty hefty investment.
5. Consider any changes you might want to make
Some changes are inexpensive to make while others involve considerable time and money. It might seem more costly to buy a move-in ready home, but it’ll take less effort to move in. An older home needing renovations can be a money pit, taking a significant effort to improve the home. If you’re looking at a new paint job, you’ll have an easier time compared with major renovations such as replacing the entire kitchen or bathrooms.
6. Don’t get stuck thinking about the superficial
At the same time that you need to consider any areas of remodeling, you don’t want to get hung up on superficial or cosmetic issues. Ignore easy to fix items like dust on countertops, a wall color that doesn’t match your taste, or existing furniture that you dislike. These are all easy to change.
7. Plan to purchase what you can afford
You’ll want to think about any debt. You have before purchasing a new house. Do you have student loan debt that you’re also paying? That’s money not being spent on your new home. When your mortgage company approves you for a mortgage, you don’t need to spend all of that money. In fact, spending less than that will help you in the future, if you have a lifestyle change such as having kids or changing jobs.
8. Shop around for a mortgage lender
When you’re looking at mortgage lenders, you don’t necessarily want to take the first one you meet. Meet with many and determine your rates given your credit and other factors. Eventually, you’ll have enough information to make a decision about the best mortgage rate for you. One thing to keep in mind while comparing offers is what the final lender costs and fees are. Make sure everything is considered and that you’re going with the actual best option.
9. Don’t plan on the home mortgage interest deduction
Lots of new homebuyers plan on the home mortgage interest deduction as a means of savings when tax time comes around. Unfortunately, you’ll only be able to claim this deduction if you itemize your taxes, and most people file with a standard deduction rather than itemizing. Don’t overspend on the house you’re buying planning on that deduction; rather, think of it as a bonus if you qualify for it.
10. You don’t have to buy
This is the most important thing to remember about home-buying. You don’t actually have to buy a place; you can rent instead. Your realtor can help you find the right place to meet your needs. Many millennials are renting to have more mobility and save more cash in the long run. If you’re not sure if an area is for you, why not rent there for a year and determine if it’s really the best place. If you might not be staying in the area long-term, you might not want to invest in a property that you’ll have to deal with when it’s time to move.
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