Must-Know Tips for Buying a Home
Posted by Brad Speniel | May 24, 2015 at 6:34 pm
ESTIMATED READING TIME: 2 minutes
Buying a house is an exciting, but overwhelming, time. There are many things to think about before you even start shopping, so be prepared. The decision to purchase a house is a big, life-changing step, and we want you to know exactly what you are getting into. Here are the top 7 tips for buying a home that you need to think about in advance. After all, you can’t start shopping until you know what you’re looking for.
How long you’ll live there
The transaction costs of buying and selling a house are substantial, including real estate fees, legal fees, selling in a down market, moving, etc. If you don’t plan to live in your new home for at least 3-5 years, you may not gain enough equity to make selling worthwhile. In that case, you’re probably better off not buying in the first place.
How much house you need
Buying a cheaper, smaller house can end up costing you extra if you have to move right away due to a growing family. On the other hand, buying more house than you need incurs extra maintenance, energy and tax costs.
Enhance your credit rating
The higher your credit score, the lower your mortgage rate will be. Spend at least a year improving your credit. Check your credit report and correct any errors, don’t apply for any new credit, stay well below credit limits and pay your bills on time.
Remember closing costs
While you’re saving your down payment, save for closing costs too. They’re typically 1% to 3% of the purchase price.
Shop for a Realtor first
Using a Realtor can help focus your search, find more listings, save time — and there’s no cost to the buyer!
Test out what you can afford
Your mortgage expert, will be happy to analyze your situation a year or so in advance, and tell you how much house and monthly payments you can afford. To test how comfortable those payments will be, start banking that amount every month (less what you’re paying now). Not only will that simulate ownership, it also helps you save for a down payment!
When you start shopping, your mortgage broker can pre-approve you for financing. This tells you exactly how much you can spend and you can lock in a low rate which will protect you in case rates rise between now and the time you close on the new home.