Purchasing a home can be an exciting time in your life. Whether you’re considering buying your first home or your fifth, there are some things to consider before enlisting an agent.
1. Understand the Cost of Ownership. The asking price on that listing you love isn’t necessarily what you’ll be paying. Potential buyers need to consider closing costs, property insurance, taxes, HOA fees, and home maintenance in addition to the principle and interest that makes up the mortgage payment.
2. Rent vs. Buy. Mortgage calculators an be great tools for estimating how much house you can afford. Remember that in most cases, buyers will put a substantial amount of money down. Some mortgages allow buyers to put as little as 3% down. But if you put less than 20% down, you’ll be required to pay mortgage insurance, which is about .85 percent of your loan amount.
3. Prepare Your Credit Score. Credit scores are required to get a mortgage. Typically, the higher credit scores yield lower interest rates. If you will be purchasing a house this year, work to increase your credit score as much as possible. If necessary, work with a financial adviser to create a plan to pay off debt.
4. Find a Real Estate Professional You Trust. You will be relying on your agent to find homes that fit your needs, lifestyle and budget. Ask friends and family members for recommendations. It’s important to work with a real estate agent who is knowledgeable about the area where you’d like to purchase and can help you through the home buying process, especially if this is your first time.
5. Know Your Must Haves. Do you need a single story home? Is moving out of your current school district not an option? Talk with your family to create a list of your must have home requirements. What features are you willing to compromise? Being clear about your requirements will help your agent find homes that meet your needs and will help you decide what features are most important to you.