Buying a Home – Here’s What You Need to Know

There are several key steps to buying a home, and you can count on us to be by your side throughout the entire process. Here are some things to keep in mind when thinking about purchasing a home.

Why should I purchase a home instead of continuing to rent?

There are pros and cons to both renting and owning a home.  With renting you have the benefit of a short-term commitment and in general most major maintenance and repairs are the responsibility of the landlord.  You miss out on the tax benefits of owning and rent does not build equity.  Also, there may be restrictions on decorating or personalizing the house to your liking.

If you desire a more permanent housing situation, owning may be the right choice for you.  You have free reign to personalize the house in your particular tastes and you build equity in your home each time you pay the mortgage.  You also may receive tax benefits which can offset the higher costs of maintenance and repairs and other fees such as insurance and real estate taxes.  In general, owning gives you more freedom, stability and security than renting.

 

I’m ready! What’s the next step?

 

1. Start by organizing your finances and credit.

Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover. Also, now is not the time to make big purchases.  Save the new car for after you close on your new home.

 

2. Find out how much home you can really afford.

The rule of thumb is that you can buy a home that runs about 2.5 times your annual salary. It is a good idea to keep your housing expenses (mortgage, taxes, insurance, HOA payments, etc.) under 28% of your monthly income and think about whether or not you can rely on a steady income for the foreseeable future.

 

3. If you don’t have 20% down, you may still qualify for a loan.

There are many different types of loans from many different lenders that require very little or even nothing down. Contacting a mortgage broker familiar with these programs can save you money and get you into the house you want.

 

4. Hire a Realtor®.

A Realtor® will have your best interests at heart and can help you with strategies during the bidding process. Choose one who not only has experience but one in which you feel confident.

 

5. Get pre-approved.

Getting pre-approved will put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a quick review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. Many sellers require a pre-approval letter to be attached with an offer and some even require a pre-approval sent to their listing agent before the house can be shown.

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