Five Questions Buyers Need to Answer
So you've decided you need a new home. Perhaps you need more space for your growing family. Or you're downsizing now that the kids have grown. Or something closer to work to ease your commute. Maybe work is taking you somewhere else in the country. There are many reasons why people need to buy a new house. With that in mind, there are several things you need to have in place when you're ready to get down to the actual business of finding and buying that new house.
What Do You Want in a Home?
If you're going to live there, you need to be clear about what you want out of a new home. An easy way to organize your thoughts is to make a list. Make three columns: Must Have, Would Like and No Way. Get feedback for the list from everyone who'll share the house. Be reasonable, of course: You can probably live without a fifty-seat theater and a bowling alley in your next house. You may not be able to get everything you want, but you'll want to be able to live with what you can get. And, you can hand me the list and I'll be able to show you exactly what you're looking for. Maybe even with a bowling alley.
Where Do You Want to Live?
If you already know the neighborhood or street you want to find a home, you're way ahead of the game. But, if you're not sure, or if you're new to the area, this is something I can really help you with. A choice of neighborhoods should take into account your comfort and safety, the quality of nearby schools, availability of retail and restaurants, and distance to your job. Because I'm familiar with the area, I can help you select a neighborhood that will be the best of all of those details.
Do You Know Your Credit Score?
Get a copy of your credit reports, preferably one of from each of the three major credit bureaus. You need to know ahead of time if you've got any problems. Fix the problems that show up on the report. Banks will loan money to people who don't have perfect credit, but you're probably going to have to put more money down and prove you can afford your mortgage and insurance.
How Much You Can Afford?
And that's the next step. Exactly how much money do you have for a down payment. Ten percent of the purchase price is often quoted, but except in rare cases, a bigger down payment is going to be best. It's going to show the lender you're serious about the purchase, and in the long run, it's going to cost you less money to own the house. Take a hard look at your monthly budget and be honest about what you can really afford as a monthly mortgage payment. You also need to plan for fees and taxes, both annual and at closing. And once you sign the paperwork, the house is yours, along with any and all maintenance and repair costs. You really must have some sort of emergency fund set aside just in case.
Is it too Good to Be True?
It's hard not to think about the impact the last several years have had on the housing market and the ability to get a homeowner loan. Owning a home is a fantastic goal for anyone, but don't forget that if it sounds to good to be true, it isn't true. Far too many people have lost their homes because they made deals that sounded great in the moment, but wound up being too much of an investment for them.
Working closely with a real estate professional can help you avoid so many of the pitfalls and nightmares of home buying. My job is to make the experience as pleasant and problem free as possible. So whether you're ready to buy now, or just considering it for the future, lets work together to get you the best deal on your next home.
This blog is maintained by Michael of Kim Hughes & Company.