Buying a home is complicated for so many reasons. There are issues you can easily plan for and some you can’t even begin to foresee. I wish someone had sat me down before buying my first house to tell me what they wish they knew at the time. Since it’s not possible to go back in time, let me save you the trouble when it comes time to buy your own house. Here are 8 things I wish I knew before buying a house:
1. Consider Your Future
Don’t just buy a house based on where you are in life at this moment. Consider if you want to be single, married, have kids, pets…etc. Do you plan on staying at your current job? These are all factors that you need to keep in mind. You want to grow into your home as the years progress, not outgrow it over the course of a few years.
2. Take Your Time!
The best deals are not made on the same day! Take your time when looking for your home. There are plenty of options out there even if that day it does not feel like it. There is always a better deal to be made and more money to be saved. Don’t fall in love or be afraid to walk away, even though love at first sight comes so easily with home buying.
3. Buy Less Home than What You Can Afford
You have heard of the term “house poor”. So many people find themselves in this situation because they want the nicest house their money can buy. They forget one simple fact – things change! Your income won’t always be the same, your car won’t always run smoothly, you may have a bonus baby! So buy what you can easily afford with a margin for error. You can find out how much you can afford with an online mortgage calculator. Use this number and plan to be below it as best you can! You want to be sure your mortgage payment is at or below 30% of what your income is. Here is a simple calculator.
4. Know Your Needs Versus Wants
There should be a good balance between your needs and your wants when picking out your first home. Distinguishing between the two is easy! A want: something you would like to have. A need: something you can’t live without. And just because you say, “I can’t live without stainless steel appliances!” doesn’t mean you NEED them. Try to have the ratio be 80% need and 20% want when choosing your home.
5. Know All the Costs!
There is more to owning a home than just the mortgage payment. There are repairs, property taxes, HOA dues, home owner’s insurance, possible PMI costs, and other maintenance costs. And I am only scratching the surface! There are other costs that you’ll have to factor into your budget just in case of emergency like a leaky roof or a busted pipe. This also serves as a good time to remind you to always have your house inspected! Make sure they check everything from the attic to the basement.
It’s trite, but I’m going to say it anyway – location, location, and LOCATION. They say this because it affects everything! Your commute, your atmosphere, your price range, your insurance, you school district – you get the gist! Do you want something close to downtown, by your work, or away from everyone? You will have to look at the pros and cons of each and remember that each is not without its own set of caveats!
The biggest pain of this whole process is the loan process. There are more than few things to get in order before applying for a home mortgage loan. Getting pre-approved will help you get an idea of all the paperwork you’ll need to get together. And trust me, there’s a mountain of it!
Figure out your down payment. It takes a lot of dedication and discipline to save up enough money, but it will reduce your mortgage payment, your possibility of private mortgage insurance, open up doors for homes you can buy, etc. Consider your options for grants as well. Each state has their own rules when it comes to grants for first-time home buyers.
This happens every year! Still, every year you’ll find people whose jaws drop the first time they see their property tax bill. When you buy your first home, you can request a copy of home tax reports. This way you can mentally and financially prepare yourself when tax season rolls around. There will be little if any surprises to the tax amount since you will get an accurate estimate from the previous year tax amount. You may even get your home owner’s insurance company to collect money in your mortgage payment in put it in an escrow account to cover your taxes.
Strengthen your credit score before applying for a mortgage. Not only will this improve your interest rate, but you will have paid down some debt!
Save for a down payment (and don’t forget about closing costs) – the more you save, the better!
This one is so important I’m going to repeat it down here. Don’t buy out of your means! Be realistic and save yourself a lot of headache.
If I can help answer any more questions, please don’t hesitate to call me at (970) 403-4008. I have been a builder, home buyer/renovator and now a real estate agent – so I know the process from the inside out.
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