So, you think you’ve found your ideal home? I'm sure you have thought about how you want to decorate it and what parties you want to host, but what are you not thinking about? Before taking the homeownership plunge, it is important to take precautionary steps to make sure that the house you've chosen is the right fit for you. Ask yourself these three question to ensure you're making the right choices and to avoid unnecessarily spending thousands of dollars.
Just because you may qualify for the loan doesn’t mean that you can make the monthly payment. The rule of thumb is that most homebuyers shouldn't spend more than 30 percent of their gross income on housing, according to HUD. Review your other expenses and really determine how much money you can comfortably spend on your monthly mortgage payment. Remember to account for other expenses, such as student loan payments, car payments, credit card bills, health insurance, and groceries, Your utility bills could also increase due to a move into a bigger place; plus, incidental costs can come up with houses for which you may not be ready. The bottom line? It's important to avoid spending every penny you have on the mortgage so that you can save.
Before making the biggest purchase in your life, wouldn’t you want a professional to alert you of any issues? After all, you wouldn’t want to buy a defective product, right? A professional can look at every inch of the house, including areas you wouldn’t even have thought to look. Having a professional assess the home’s condition is essential and can save you from having to pay to fix a hidden issue down the road. You may be able to request that any issues that come up through the home inspection be fixed by the seller before settlement, depending on your contract.
Planning for the next few years is easy, but what about even longer than that? Think about what you may need in five, 10 or even 20 years from now. Do you intend to raise kids in this house? If so, is there enough room in the house and reputable schools in the area? Is the home’s value likely to increase or decline in the future? Assess what your future goals are and if this house reflects those goals. The length of time you plan to call this place home directly affects which mortgage is right for you. Choosing the wrong one can cost you quite a lot of money. Talk to your mortgage banker about which loan type best fits your plan.
It is easy to get carried away during the homebuying process, but do your due diligence to make it easier overall. Learn from these common mistakes so you can avoid a headache down the road and remember that you aren't doing this alone! Consult with your mortgage banker about how your new home will affect your budget.
Interested in learning more about the homebuying process? Click here to download Your Guide to Happy Homebuying!