Buying a home is a big life decision, and one that has to be carefully made.
It's never a good thing to rush through the process. After all, you want this purchase to be one you adore and can see yourself living in for the long term, where you can raise a family if applicable.
But the housing market can be an overwhelming place, especially for first time buyers. Even experienced homebuyers can run into obstacles when looking for a new home. At a time when the market is improving at a steady pace and housing inventory is low, you will have to consider some important factors when buying a home.
Since it's currently a seller's market, you might feel pressured to make an offer right away on a piece of property that is adequate. But by remembering these factors, you will be able to find the perfect home.
No. 1: Price range
There's no way around it: You'll need a mortgage to help you finalize a deal. Before you take out a mortgage, however, you'll want to manage your finances to help you save enough money for at least a 20 percent down payment.
By settling on a price range, you can help yourself out in a few ways. For example, according to Trulia, the average listing price for homes in Texas is $317,591, while in Missouri it's $186,237. When you figure out what works for your budget, you can start to develop an idea of just how much you need to save for that 20 percent down payment. From there, you will then be able to meet with a lender and discuss how big of a mortgage you need to take out.
It's important to set a price range that is reasonable and one you know you can afford. Even though you'll have a mortgage, you don't want to purchase an expensive home that will result in higher monthly payments. Homes that are out of your price range could result in your monthly income being stretched thin if a majority of it is going toward mortgage payments, which will consist of you paying off the principal balance remaining as well as interest.
"Set a price range that is reasonable and one you know you can afford."
The Motley Fool recommended you look for homes that are two-and-a-half times your gross income. This is just a recommendation, but the main point is to look for a home within your price range so you are able to take a mortgage you can comfortably afford every month.
No. 2: The neighborhood
The neighborhood and surrounding area of your future home is an important consideration because your happiness or comfort in a new home can be affected. Buying a home in a lively neighborhood that's safe for children can make all the difference instead of raising a family in an area with little economic development or subpar schools.
But the neighborhood isn't just about your neighbors. It's a larger reflection of the city or town you're looking to live in. For example, large cities are home to unique areas. Some might have plenty of coffee shops and small businesses up and down the street, whereas other neighborhoods might be geared more toward families and don't have as many of those features.
As such, research is important when looking for areas to live in. See what features are nearby and don't forget to look up statistics that indicate if the area is troubled by crime.
No. 3: The house itself
Finally, the house itself has to be carefully considered, especially the size and amount of space. Couples and individuals don't need massive homes, but families will likely need multiple rooms and more space to accommodate children.
Young families will therefore need to find a home that isn't too big that it spreads them out and creates an empty feeling, but they also don't want too small of a home that will not suffice if and when the family starts to expand.
However, you don't exactly want to purchase a home that is too large. Not only will there be an empty feeling throughout, but you'll also pay a higher closing cost. Additionally, you may also pay more in property taxes. Rates will vary depending on which county you live in, but generally speaking, property taxes are calculated based on the home's value. Larger homes and lots are subsequently valued higher.
Even if you plan to stay at the home you just bought for a handful of years before moving somewhere else, you'll still want to make sure there's enough space inside and outside.
The homebuying process is one that can't be rushed. You have to put in the time to find the right home based off important factors, such as cost and the size of the property.
For more information about smart ways to manage your finances, contact Landmark Bank.
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