The process of buying a house can be both exciting and overwhelming. As a first-time homeowner, you may be feeling a mix of both. To help set you up for success, we’ve compiled a list of five things you need to know before buying a house. Keep reading to learn more
Get Pre-Approved For A Mortgage
Before you start shopping for your dream home, it’s important to get pre-approved for a mortgage. This will give you an idea of how much you can afford to spend—and it will also make the actual home-buying process go much smoother.
When you’re ready to begin the pre-approval process, reach out to your bank or credit union and provide them with information about your income, debts, and assets. They’ll then let you know how much they’re willing to lend you. It’s important to note that getting pre-approved for a mortgage is not the same as getting pre-qualified—pre-approval involves submitting an application and providing supporting documentation.
It’s also important to think about the long-term when it comes to your mortgage. If you’re thinking about mortgage refinancing down the road, make sure you ask your lender about their refinance options. Some lenders may offer a lower interest rate if you refinance, while others may allow you to borrow against your home’s equity. It’s important to weigh all of your options before making a decision.
If you’re happy with your current mortgage but are experiencing difficulty making your monthly payments, reach out to your lender right away. They may be able to help you work out a payment plan that works for both you and them.
Determine Your Wish List vs Your Must-Haves
It’s helpful to sit down and make two lists before beginning your house hunt: a wish list and a must-have list. Your must-have list should include features that are absolute requirements (like a certain number of bedrooms), while your wish list can include things that would be nice to have but aren’t deal breakers (like a finished basement). Having these lists will help keep you focused on finding the right home for you—and it will also prevent you from getting caught up in the excitement of the home-buying process and making an impulsive purchase.
When buying a house, there are a few home specifications you should consider. You need to think about the number of bedrooms and bathrooms you’ll need, as well as the size of the property. Another thing to consider is the location—you’ll want to find a neighborhood that you feel comfortable in and that fits your lifestyle. And finally, don’t forget to budget for home repairs and updates!
Consider The Total Cost Of Homeownership
Buying a home costs more than just the sticker price—you also need to factor in ongoing expenses like property taxes, repairs and maintenance, and utilities. According to the 2019 American Community Survey of the Census Bureau, the median monthly cost of homeownership in the US is $1,609—but keep in mind that this number will vary based on factors like location, size, age of the home, and type of home (e.g., detached single-family vs condo). Make sure you have a realistic understanding of all the costs involved in owning a home before making an offer on one.
When calculating the total cost of homeownership, it’s important to consider all the associated expenses. These may include:
- Mortgage payments
- Property taxes
- Home repairs and maintenance
- HOA fees (if applicable)
- Home Insurance
It’s important to be prepared for these costs before buying a home, as they can add up quickly. Make sure you have a solid financial plan in place and are comfortable with the monthly payments you’ll be making.
Have A Contingency Plan
It’s always best to have a contingency plan in place in case something unexpected comes up during the escrow period—for example, if the results of the home inspection come back less than favorable or if your financing falls through at the last minute.
One common contingency plan is to request that the sellers agree to make certain repairs or improvements before closing on the sale (known as a “repair escrow”). That way, if any problems come up during inspection, you won’t have to walk away from the deal completely empty-handed.
Don’t Forget About Closing Costs
When budgeting for your new home, don’t forget to factor in closing costs—these are fees charged by lenders, title companies, real estate agents, and others involved in facilitating the sale of the property.
The typical closing costs for a home purchase range from 3% to 6% of the total purchase price.
By being aware of these costs ahead of time, you can budget accordingly and make sure you have the funds available when it comes time to finalize the sale.
Buying a house is a big undertaking—but it doesn’t have to be daunting! By keeping these five things in mind during your search, you’ll be well on your way to finding (and closing on) your dream home in no time flat.