The Guide To Buying A New Home
ARTICLE SOURCE: THESIMPLEDOLLAR.COM SHOULD YOU EVEN BUY? SO ALL YOUR FRIENDS ARE BUYING A HOUSE, AND YOUR MOM SAYS IT’S A GOOD INVESTMENT. WHAT ELSE DO YOU NEED TO CONSIDER BEFORE MAKING THE LEAP? BEFORE GETTING INTO THE PROS AND CONS OF HOME OWNERSHIP, GENERALLY SPEAKING, THERE ARE A FEW UNIVERSAL FACTORS TO CONSIDER BEFORE COMMITTING TO PURCHASING A HOME.
GET PRE-APPROVED SO YOU’VE DECIDED TO BUY. BEFORE YOU GO OUT LOOKING AT MILLION-DOLLAR MANSIONS, YOU NEED TO GET AN IDEA OF WHAT YOU CAN AFFORD AND HOW MUCH YOU CAN BORROW FROM A BANK. IF YOU’VE GONE THROUGH THE BUY/RENT DECISION, YOU MAY HAVE A GOOD IDEA OF WHAT MONTHLY PAYMENT YOU CAN AFFORD. THIS IS A GOOD STARTING POINT, BUT AS I POINTED OUT EARLIER, THERE ARE MANY MORE COSTS INVOLVED WITH THE PURCHASE OF A HOME, AND ALL OF THESE PLAY INTO YOUR FINANCING DECISION. THE MOST SIGNIFICANT CASH OUTLAY IS A DOWN PAYMENT — THIS IS USUALLY 20% OF THE PURCHASE PRICE. WHAT YOU DO NOT KNOW AT THIS POINT IS HOW MUCH MONEY A BANK WILL LEND YOU. SO, YOUR FIRST STEP TOWARD FINANCING A NEW HOME IS TO GET PRE-APPROVED.
TIME FRAME. BUYING A HOME USUALLY ISN’T A GOOD IDEA IF YOU’RE LIKELY TO CHANGE JOBS OR WANT TO MOVE WITHIN THE NEXT 7-10 YEARS. DOWN PAYMENT. YOU USUALLY NEED TO COME UP WITH ROUGHLY 20% OF THE PURCHASE PRICE IN CASH BEFORE FINANCING. COSTS ABOVE AND BEYOND YOUR MORTGAGE. MOST PEOPLE DON’T FACTOR IN ADDITIONAL COSTS LIKE PROPERTY TAXES, MAINTENANCE, AND UPKEEP AND REPAIRS. THESE EXPENSES ARE ALL ADDITIONAL COSTS A RENTER DOESN’T HAVE TO THINK ABOUT, AND THEY CAN BE SIGNIFICANT.
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Find a Home Now for the fun part. Finding a home can be an incredibly exciting and emotional experience. Enjoy it. However, remember there are many variables which are out of your control and can prevent you from getting the home you fall in love with — so try to tread lightly!
THE OFFER TO BUY A HOME You now have a home you would like to buy. Congratulations! In this next step, you’ll be making your best “offer” to purchase the home from the seller. You’re not actually purchasing the home, but you are agreeing, in principle, to purchase the home provided certain contingencies are met.
There will likely be some negotiation back and forth on price and other various aspects of the offer, so be prepared by committing to your max price and other elements you’re unwilling to part with. Then stick to them!
GET AN INSPECTION Remember the home inspection contingency? Now is when you implement it. Most sellers want a fast turnaround on an inspection, so get moving quickly. Find the best inspector you can. Take recommendations from your realtor, but remember that some of the best, most critical inspectors are considered “deal killers” by realtors, so perform your own research to find one. You want the most thorough inspection possible.