Buying your first home is a huge financial step, and you should be certain that you’ve considered the important factors before signing on the dotted line. Many first-time home buyers make the mistake of not doing their research, and this can lead to costly down payments and missed opportunities. That’s why it’s essential to research exactly what you need to know before getting a new home.
Buying a home isn’t just about putting your name on the deed and moving in; it’s also about taking on years of financial responsibility, legal obligations, and other considerations that make it one of the biggest decisions you’ll ever make in life. As you consider the process of purchasing a home, keep the following information in mind:
1. The Cost of the Home
One of the first decisions to make when considering buying a home is to figure out how much you’re able to afford. When it comes to buying real estate, location, size, and quality are important considerations, but those things aren’t nearly as important as the price. Think about your budget and what you can realistically afford without taking on too much debt or going broke.
2. The Commute
Don’t forget to consider your commute when selecting the right home for yourself. If you value your time, consider how much longer travel will take and whether it will significantly impact your daily routine. By figuring out how far you’re able to commute, you’ll get a better idea of the location of your future home.
3. Your Monthly Budget
A mortgage is one of the biggest expenses you’ll ever have. To find out how much home you can comfortably afford on your mortgage, calculate your monthly payment by figuring out the front-end ratio. This allows you to measure your income against all debts as well as property taxes and homeowner’s insurance. The final number should be below 28% of your income.
4. Home’s Condition
Don’t consider buying a home if you haven’t yet conducted an inspection. Residential inspections allow home buyers to ensure there’s no damage or other issues that will cost extra money when purchasing. Schedule these as early in advance as possible so they don’t end up being at the bottom of your to-do list when everything else is more pressing.
5. The Down Payment
A down payment is typically anywhere between 3.5% and 20% of a property’s value, but that doesn’t mean you should pay more than you can afford. As soon as you know that you want to buy a home, put enough money aside for the initial down payment. If possible, try to save up half of your down payment before looking at homes as this will give you more leverage when purchasing.
6. The Type of Mortgage
Depending on your circumstances and goals, you may want to consider several different types of mortgages before buying a home. A good real estate agent can help you determine which is best for you.
As you do your research, you’ll see that your options are varied: from mixed-rate, adjustable-rate, and hybrid mortgages to jumbo loans and cash-out refinancing opportunities. Remember, each type has pros and cons that can affect how much home you will be able to afford.
7. The Size of the Property
Size matters in many ways when it comes to buying your first home. A large home can seem like more house for your money, but that doesn’t mean it will be as affordable to own as an apartment or small home.
It is also important to note that larger homes typically require more upkeep and maintenance, which can increase your monthly costs. If you are planning on starting a family and want the most affordable option, it might be worth looking into smaller homes instead.
8. Neighborhood Amenities
Good schools and other neighborhood amenities are important factors to consider when looking for a home. Parents of young children will want to find an area with highly rated schools, while retirees may prefer to live in an area with easy access to local services, shops, and restaurants. Additionally, consider amenities inside the home. Add-ons like solar panels will make it easy to live a greener lifestyle.
Buying a home can be very exciting, but it’s important to take your time and make sure that you’re making the right decision for yourself and your family before committing to a purchase. Keep these eight things in mind as you consider buying a home.