By Nancy Godwin
Buying a home for the first time? You might feel slightly overwhelmed by how much there is to consider, and you should be. A home is likely the most expensive thing the average American will buy. It’s also a fairly long-term commitment, and with one in every four American regretting their choice of buying a home, it makes some sense to give it some thought before jumping on the “American Dream” bandwagon.
To help, here are five essential home buying tips that will save you a lot of time, money, and energy.
Tip 1: Be 100 Percent Confident on Why You’re Buying a Home
Tired of renting? Frustrated with roommates? Want to experience the pride of ownership? These reasons are not enough to justify taking on the responsibility of owning a home. Envying friends and colleagues who talk nonstop of how fabulous it is to own a home is also another terrible reason to buy one.
If you begin to feel less and less confident of your decision, or if your reason changes every few days, then maybe you should put a pause on purchasing a home.
Besides, once you’re crystal clear on your purpose for buying, every other major decision such as location, cost, or the type of house becomes easier to make.
Tip 2: Know How Much House You Can Comfortably Afford
Ever heard the term “house poor”? This is when a person ends up spending so much of their income on house costs that they have little or nothing left over for other necessities, such as food, water, clothing, health care, and the occasional entertainment.
To avoid going near or completely broke after your monthly mortgage payments, you must know how much house you can comfortably afford. The easiest way to find out is to use an online home affordability calculator such as Zillow, Bankrate, or CNN money.
According to Dave Ramsey, a renowned guru in financial matters, you should spend no more than 25 percent of your annual income on your house, and this should include your mortgage, insurance, and property taxes. Of course, this number is flexible but should go no higher than 30 percent. Also keep in mind the down payment, closing costs, and maintenance cots you will incur.
The point is, just because a bank says you’re qualified for a $300,000 loan does not mean you can afford to spend that much on a house.
Tip 3: Buy a Home for the Present Not the Future
Of course, you should keep the future in mind when buying a home, but that should be to a small extent. The large part of your decision should be based on here and now, such as how much money do you make right now? How big of a family do you have right now? What sort of lifestyle do you live right now?
Don’t buy a house way above your current means simply because you expect a promotion at work or more profit from your business. At the same time, don’t fall into the trap of buying the biggest house you can find because you hope to have a large family someday. As for lifestyle, if you don’t garden, don’t pay extra for a large yard in hopes that one day you will pick up the hobby. Same goes for perks like a home theater if you’re an outdoorsy type of person, because it will remain all but useless to you.
While it’s OK to aspire to the life you want to have when choosing a home, it’s important not to blur the lines between dreams and reality especially if it will cost you money.
Tip 4: Buy a New Home
For first time buyers, it’s best to buy a brand new or relatively new house. Avoid fixer-uppers as much as possible. This is because while a fixer-upper might be cheaper to buy, the repairs and renovations involved usually end up costing more than you anticipate.
Fixer-uppers are notorious for unexpected repairs. What initially seemed like a few window fixes and a paint job ends up becoming a new plumbing system.
Besides, you will enjoy your home more without having to deal with unprofessional contractors or subcontractors who either do a poor job of renovating or continually disappoint by arriving late or not showing up at all.
If a new home is out of your price range, then at least educate yourself on how to choose the right fixer-upper. As a rule of thumb, if things like electrical, plumbing, or HVAC repairs are involved, skip that house.
Tip 5: Choose an Agent Wisely
According to Bankrate, you should do a few things before deciding on a real estate agent. Firstly, talk with recent clients of the agent you have in mind. Look up the license of the agent, and check their credentials to see if they have any specialty training like ABR (Accredited Buyers Representative). Find out how long they have been in the business. Finally, check out their current listings online to see if it tallies with what you want, and if they have a web personality.
Other home buying tips to consider:
- Avoid borrowing money from friends and family to buy a bigger or more luxury home.
- Make sure to take a trip to the neighborhood(s) you’re considering to get a feel of what it’s like to live there.
- Don’t skimp out on a home inspection. It may be expensive, but it’s worth it.
- Find out if there’s an existing HOA and properly review all their documents. You will be surprised at some HOA horror stories.
With these tips in mind, you’re less likely to have the all too common buyer’s remorse. Happy house hunting!
Images used with permission, courtesy of www.dreamstime.com