Six Things You Need To Know Before You Buy a House
Buying a home is one of the biggest financial investments you will make in your lifetime. Because this is such a huge commitment, there are a number of things that you need to know before you jump into home ownership. Between the strict lending requirements and the growing housing prices, you should know how to prepare yourself for the process of buying a home. Here are 6 things you should know before you start viewing properties, and especially before you make your first offer.
1. The Pros and Cons of Buying a Home
Buying a home is not all roses and barbecues. While there are several advantages to buying, you should know the drawbacks as well. When you rent a property, you are only committed to the lease for the lease term. You are financially and legally committed when you buy a home. You are obligated to pay your mortgage, property taxes, property insurance premiums, and maintenance costs as a homeowner. If you are not prepared to deal with these expenses and responsibilities, you might not be ready to own a home.
2. Get a Pre-Approval Before Shopping
If you are not sure how much you can afford to spend on a home with your current income, it is a good idea to apply for a pre-approval before you start shopping. A pre-approval from a mortgage lender can be very helpful because it will state how much the mortgage company is willing to lend you based on your finances and your credit score. By getting this information, you can shop in a specific price range or hire a credit repair service to repair your credit so that you can get better rates.
3. Consider What You Want Long Term
It is easy to get hung up on the type of home you want. If you have always dreamed of having your own pool, you might cross properties off the list that do not have a pool. You need to consider what you want long term. You cannot move a home to a different neighborhood or choose a public school out of the district. Consider the important factors that cannot be changed before focusing on factors, like a pool, which can easily be added later.
4. The Common Mistakes Buyers Make
If this is your first time buying a home, you should learn from the mistakes of other buyers. Home buyers often let their emotions guide them through the negotiation process, which is something that you should avoid. You need think of a fair price that you are willing to pay, but negotiation should not be seen as a competition where one party wins. Learn from the mistakes of others and do not get emotionally attached to contingencies that may cause you to lose the home of your dreams.
5. Know About Short Sales
Short sales are becoming increasingly common. If you do choose to buy a short sale or a foreclosure, do not overlook the importance of an inspection. Just because the home is sold as is does not mean you do not need to know what you are getting into. After making an offer, a poor inspection also lets you walk away from the deal. Be ready to deal with the bank, the delays, and the entire process if you really want to buy a lender-owned property.
6. Which Mortgage is Right?
Adjustable Rate Mortgages were once popular because they came with a lower initial interest rate. With current fixed rate mortgages at an all-time low, it is in the interests of borrowers to secure a fixed rate loan where the rates remain low for the life of the loan.
You are going to have a lot of questions when you buy a home. Work on improving your credit score, save for your down payment, decide how much you can afford to spend, and find the home of your dreams after you compare mortgage rates and get a pre-approval.