Things you need to know about buying a house
How exciting! You’re about to get into so much debt that it might take you 30 years to get out of it – just kidding (sort of). You’ve probably heard that real estate is a great investment. And it totally is! But in some cases, buying a house can be a nightmare in disguise. You never really feel like you’re ready to buy your first home — or you may not even know what home buying actually entails.
Whatever the case, we’re here to give you the lowdown on what you need to know before buying your first home. If you check all these boxes, your first home purchase will go smoothly!
GETTING APPROVAL IS MORE THAN YOUR INCOME
Before you even start thinking about buying a home, you need to make sure you’re approved. Family “I knew” the amount they wanted to spend on a house and what they could afford. But they didn’t realize that the approval process was about more than just what they wanted to spend!
There are many different factors that go into the pre-approval process. The main ones are:
Based on your income, they will estimate how much you can afford. The higher the income, the higher the loan. This does not mean that if you have a low income, you will not get approved for credit.
Duration of work:
You must normally have been in the same job for 2 years or more. This is not the time to change jobs or try to figure out your career. They want to see consistency. We’re not saying you can’t get a loan, because you can. You’ll just have to jump through a lot more hoops if you’ve recently changed jobs in the last 2 years.
Using your credit score, they can figure out how “loanable” you are. Just make your payments, folks. If you don’t make your payments, they won’t loan you the money.
THERE ARE MORE COSTS THAN JUST PAYING THE MORTGAGE
You got your pre-approval back and are pleasantly surprised to be approved for more than you thought. This is where home buyers make the SINGLE biggest mistake. Buying a house at the maximum they were approved for.
If you can take anything away from this post, then we want it to be this – Do NOT buy a home for the maximum amount you are approved for. There’s a reason this is your maximum amount.
If you’re barely making ends meet just paying your mortgage, what happens when unexpected expenses arise, like job loss or medical bills (and yes, it CAN happen to you). There’s always something that comes up and you definitely don’t want to be struggling to pay your mortgage.
Not only do you need to consider PMI, but also closing costs. You’ll spend anywhere from 2%-5% of the home’s price on closing costs. If you feel completely comfortable and confident that you can pay the closing costs and put down a decent amount (preferably 20%), then you’re pretty much safe. There’s no point paying more than you have to just because you didn’t want to take an extra year or two to save.
HAVING AN EMERGENCY FUND WILL MAKE OR BREAK YOU
We know you think nothing will ever happen to you and life will always be nice and wonderful. But we hate to tell you that you’re wrong. We just want you to be prepared and smart. You should typically save 1% of your home’s ongoing maintenance costs each year.
NOT WORTH IT IF YOU’VE BEEN THERE FOR LESS THAN 5 YEARS
It has been proven that you should be in hFrI for 5 years to start breaking even.
The first 5 years are just interest payments. You haven’t even cracked your principal at that time. You will now have to try to resell at the purchase price you bought for, or to get your money back, try to sell higher. Doesn’t that sound like such a hassle?!
There are so many upfront costs that it’s not even worth it if you don’t plan on staying that long. In this case, renting may be a better option.
YES, THERE IS SUCH A SELLERS’ AND BUYERS’ MARKET
The market you are in can greatly affect your purchasing power. Builders can sell their homes at ridiculously inflated prices and snap them up in days.
In a buyer’s market, you have a lot more leeway. You have the deciding power to find a home you truly love (and not just choose one because you can’t find anything else). Plus, you even have the option to get in BELOW the asking price. If you know you’re in a seller’s market and you’re afraid of paying too much for a house, it’s okay to wait.
YOUR GUT KNOWS MORE THAN YOU
Feelings are very important. Your intuition is much smarter than you think, and you should listen to it. Do you feel ready to buy your first home? Is it something that is truly in the best interest of your family or do you just want a home because everyone else does.
You may never feel completely confident about buying a home (and that’s totally normal), but just make sure you’re prepared. Buying your first home can truly be a great experience and an even better long-term investment.
Whatever you choose, we hope these tips have helped you make a decision and be a little more informed about what buying your first home actually entails.
For more information, please visit – Developers of Mantri website