Buying a home can be exciting, and home ownership is a major step toward building wealth. Many consider homeownership as part of the “American Dream”. Whatever your reasons for buying a home, there are quite a few steps before you can kick back and enjoy it.
A successful home buying experience is all about getting the details right. And, although you feel ready to embark on this journey there are a few things you may not have considered. Whether you are a first time buyer, or it’s been a been a few years since your last home purchase, here are a few home buying tips that you possibly aren’t aware of.
1. Think About Resale
You think you’ve found the perfect house, but it backs to a busy road. It doesn’t bother you since you spend very little time outside. Or the school district is mediocre, but who cares? You don’t have children anyway.
Just know that these things and others can hurt your resale value when it comes time for you to sell. In fact, homes in good school districts are more likely to sell for a higher price and usually sell more quickly. And proximity to a noisy busy road is likely to turn off most buyers.
2. Buy the Home You Can Afford
Your lender will qualify you for a loan based on your income, not your lifestyle.
Your monthly payment will include:
- Your loan principle (the amount of money you borrowed)
- Your loan interest
- Private mortgage insurance (PMI) if you put less than 20% down
On top of that you will have utilities expenses (electric, gas, water, cable, etc.) And if you live in a community with a Homeowner’s Association (HOA), you’ll have HOA fees as well.
Don’t feel like you have to spend your entire preapproval amount. Budget all your life expenses so you don’t end up “house poor.”
3. You Don’t Need 20% Down
In some circumstances, it will make some sense to keep some extra cash instead of applying it all to a down payment. Some lenders offer low down payment or no down payment loans such as:
- VA loan: 0% down (must be a Veteran or Veteran’s spouse)
- FHA loan: 3.5% down
- USDA loans: 0% down
- Some conventional loans: 3% down
Talk to several reputable lenders to find out what their best deal is and which mortgage is right for you.
4. Don’t Be Afraid to Walk
You’ve found the perfect home. You love it and are already picturing yourself living there. But there are problems. You’ve had the home inspected and the findings show that the home needs multiple costly repairs, or that there are foundation issues, etc. The title report comes back showing there are issues with the title. Or, it could simply be a gut feeling.
Remember, you’re in charge and you don’t want to be stuck with a home that isn’t right for you. There are regulations in place to help you cancel the contract and receive your earnest deposit back, so don’t be afraid to back out.
5. Have an Emergency Fund
Once you become a homeowner, you won’t have a landlord if things go wrong. Any systems that fail including roof, drains & plumbing, electric system, heating & cooling, water heater, appliances, etc. will be yours to repair or replace if something breaks. “Saving for a rainy day” is still good advice and most financial advisors recommend having six months of expenses put by for unforeseen emergencies.
A home is one of the most important assets that most people will ever buy. It’s important to have trusted professionals on your side. Your lender will guide you through the process of obtaining a mortgage. Your realtor will be there to help you find your home, negotiate the offer, walk you through the escrow process and finally obtain the keys to your dream home.
Contact the Donnelly Group
Whether it’s been a minute since you last jumped into the home buying process, you are a first time buyer, or are new to the Phoenix housing market, the Donnelly Group has the expertise to help you…along with many more home buying tips to get you through your purchase.