For most people, buying a home will be the largest financial commitment they will ever make. It’s nerve-wracking, incredibly exciting, and often the culmination of years of hard work and prudent financial decisions. It’s impossible to know exactly what to expect before buying a home, but there are certain universal considerations that every prospective buyer should think about before they commit to a mortgage.
The Local School District Matters
Even if you don’t have children, it’s important to familiarize yourself with the school districts in your area. The quality of your local school district will have a direct impact on the property value of your home. If you ever want to put your home on the resale market, living within the parameters of a good district will make it easier to find a buyer and fetch a high price.
If you’re using an online service to find your dream home, make sure you toggle the “school district map” option!
Have an Emergency Fund
Everyone knows that buying a home is more expensive than renting an apartment, but many first-time homebuyers don’t consider how much their monthly payments will actually increase. While apartments only require you to pay a monthly rent check and utility bills, homeowners are responsible for mortgage payments, utilities, and also the cost of general upkeep, which is traditionally covered by a landlord. These higher costs mean that any breaks in your normal income can be disastrous.
By saving money in an emergency fund, you are doing both your family and yourself a favor. It’s a preventative action that gives you a comfortable buffer if any brief lapse in employment should occur.
Make Sure Your Credit is in Good Standing
Like the vast majority of first-time homebuyers, you will probably be taking out a mortgage. While there are many factors that influence the cost of a mortgage, the first thing any lender will do is check your credit score to determine if you’re someone they can trust.
While you’re applying for a mortgage, it’s important to make sure your credit doesn’t take any unnecessary hits. Put a pause on all new credit activity, such as opening new credit accounts, until you have secured your home loan. Also, take the time to comb through your credit history and contest any errors that can be affecting your score.
If you’re looking at mortgage rates be sure to use one of the many free credit score calculators available on the internet to check your standing before submitting an application.
You Don’t Have to Max Out Your Budget
If you do get approved for a loan, don’t fall into the trap of thinking that you have to spend the maximum allowed by your budget. Think of this as the absolute amount that you can spend instead of a target that you’re supposed to reach.
At the end of the day, any money you save during the home buying process will be able to go back into savings, investments, gifts, or into repairs to the home itself. If you max out your budget, you might find yourself in a financial hole.
Take Full Advantage of Open Houses
While the internet has become an increasingly popular resource for finding homes, attending open houses is still a great way to search. Touring open houses gives you a better sense of what’s available on the market, and it becomes easier to compare homes when you have actually visited a few.
When touring an open house, pay close attention to the condition of a home. Ask the real estate agent when the last time repairs were made, if they were done professionally or by the previous homeowner, and any other questions that give you a sense of the home’s history. In a worst-case scenario, you buy what you think is your dream home only to find that it is riddled with costly problems.
You’re on the cusp of buying your first home, congratulations! It’s a huge milestone, and one that you should be proud to reach. However, before you take out a mortgage or fall in love with a house, make sure you take steps to secure your investment and preempt any problems that might arise later on. Ask questions, don’t spend more than you can afford and consider how the neighborhood will affect the future value of your home!
Credit: East End Taste