Thinking about buying a house? Before you jump headlong into the whole process, you might want to take a step back and consider the following factors:
- You Must Have Your Finances and Credit in Order – If they’re not, you’ll have a harder time qualifying for a mortgage and it’ll be tough to get the lowest rates. Make sure you pay your bills on time, monitor your credit report and don’t make any major purchases prior to trying to buy a home. Also, be sure that you can actually afford a house payment.
- Decide Whether Buying is Worth It – In many large cities, buying a home is much less expensive then renting. However, you need to decide for yourself if you feel you’re ready to buy and whether you’re up for all the responsibility that comes with owning a home.
- Have a Down Payment – Sure, you can actually buy a house without a down payment but if you can put 20 percent down you’ll get a better rate, smaller mortgage payments and be eligible to qualify for more loans. The moment you begin to think about buying a home, start saving for the down payment and for closing costs.
- Understand How the Whole Process Works – There’s a lot to buying a home, like figuring how much you can afford, what kind of house you want, can you handle a fixer-upper, etc. Make sure you check out the Department of Housing and Urban Development website for tips.
- Speaking of Fixer-Uppers… — Beware of houses that require a lot of work – even if you’re a handyman or woman. Sure, a fixer-upper might be a home that you wouldn’t be able to afford if it was in excellent shape, but do you really want to do all that work? Make sure you get a good inspector and pay particular attention to the basement and the house’s foundation, two of the biggest money-drainers ever when it comes to a house.
- Be on the Lookout for Big Money Issues – If the house is in a flood zone, the electrical system is from 1920, there are water stains on the walls or ceilings, the foundation is sinking, the roof needs to be replaced or there are plumbing issues, you might want to reconsider.
- Don’t be in a Hurry – You’ve decided you want to buy a house but be careful not to rush into anything. You’re likely to have this house for quite some time, so don’t buy the first thing you see. Look at a number of homes and also shop around for mortgages too.
- Do Your Homework – Find out how long the house has been on the market (if it’s been several months it may be over-priced), what the neighborhood is like, how much other homes in the neighborhood have sold for and research the history of the home.
- Buying/Selling Simultaneously – It can be tough if you’re trying to sell a house at the same time that you’re buying another one. Which should be your priority? Both have their up sides and down sides – if you buy before you sell, you won’t have to worry about moving quickly but if you sell first you’ll know exactly how much money you’ve got to spend on a new house. In the end, it’s up to you to decide which route to take.
- Don’t be Married to Online Calculations – There are plenty of online calculators out there that will tell you, based on your income and debts, how much house you can afford. Don’t feel like you have to adhere to that number. If you’re concerned about making your payments, look for a house that costs less than what you’re being told you can afford.
Buying a house is one of the biggest investments you’ll make in your lifetime – be sure you know the ins and outs of the entire process before you dive in!