Buying a house is a daunting life decision, so preparation is required before making that big step. After all, it involves a lot of requirements, tasks, and processes before purchasing a house. If you’re a first-time homeowner, there are many things to consider, from finances to your needs.
Fortunately, we’re here to help you narrow down the homebuying process. So read on as we answer the top questions to consider before buying a house.
1. How’s Your Finances Doing?
Before you even check online listings or think about how your dream home would look like, you should first look into your financial health. Check your finances thoroughly to determine if you’re ready to buy a house. In addition, you should be prepared for the ongoing expenses of owning a home, whether for renovation or maintenance. After auditing your finances, you can decide whether to proceed with the purchase or do more preparation.
If you don’t have an emergency savings account, don’t even think about buying a house. But if you have, it should contain at least three to six months of your living expenses. Remember, buying a home requires significant upfront costs for the down payment and closing costs. Thus, you should have money for the upfront costs and emergencies since lenders will demand it.
Another factor to consider is your expenses, including food, utilities, student loan, car maintenance, clothing, savings, and other miscellaneous items. Calculate your monthly expenditure, so you can determine how much mortgage payment you can actually afford.
Generally, you should have a good credit record you’re paying bills on time to qualify for a home loan. Also, your debt-to-income ratio should not exceed 43%. Most lenders restrict the house expenses of borrowers to around 30% of their monthly gross income. But it may vary based on the local real estate market.
2. Which Type of Home Suits Your Needs and Lifestyle?
After assessing your finances, the next thing to consider is the type of home that best suits your needs and lifestyle. You have many options in a residential property, from the traditional single-family home, duplex, and townhouse to condominium and multifamily housing. Whichever you choose, each house comes with pros and cons.
Therefore, you should choose the best property that meets your homeownership goals. Meanwhile, you can get cheaper upfront costs by purchasing a fixer-upper. However, it will require more time and money before turning it into your dream.
3. What Features Do You Want To Have In Your Home?
A house is probably one of the big purchases one can fulfill in life. Although it’s good to remain flexible, your dream home should have features that closely meet your needs and desires. Thus, you should list the features that cater to both, such as the location, neighborhood, and backyard size.
Furthermore, you should look into small details, such as the bathroom and kitchen layout, if your preferred fixtures and appliances will fit. If someone in your family has trouble with their locomotor system, a house with a lift and ramps is also a feature to consider.
4. How Much Mortage Are You Qualified To Borrow?
But before you start house hunting, you should get a quotation from different lenders on how much money you can borrow. If you think you can afford to purchase a $300,000 house, lenders may think differently. The loan is based on varying factors, like your monthly income and debt.
Moreover, real estate agents won’t waste their time on clients who haven’t figured out how much they can afford. So if you’re serious about buying your first-ever home, consider getting pre-approved for a mortgage.
5. How Much Can You Really Afford?
A bank usually offers a home loan more than the borrower can afford. For instance, a bank may pre-approve you for a $500,000 home loan. While you may think you can buy your dream home with that amount, it doesn’t necessarily mean you should max it out.
This is a common mistake of first-time homebuyers where they end up poor even though they bought a home. They have maxed out their home loan and have little money left after paying their monthly expenses.
6. Who Will Help You In the Buying Process?
Once you have clarified your finances, needs, and wants, it’s time to seek assistance from a trusted real estate agent. These professionals will help you in the buying process by locating homes that are in your price range and meets your needs. Also, they will accompany you in viewing the houses and help you with the negotiation process.
An expert real estate agent will help you make an offer, get a loan, complete the paperwork, and protect you from any drawbacks throughout the buying process. They usually get a commission from the seller’s proceeds.