Buying a house is a big deal and there are some things that can make a world of difference for your long-term homeownership happiness! Our tips for buying a home come straight from industry experts, so you’re prepared to make this exciting move.
Save for a downpayment to avoid purchasing mortgage insurance.
Mortgage insurance adds to your monthly bill, eating into your purchasing power. Mortgage insurance can cost you as much as 1% of the entire loan, meaning that you could spend an addition $3,000 a year for a $300,000 loan. Over the span of a 30 year loan, you’ve spent $90,000 on mortgage insurance. Even if you find mortgage insurance at a lower rate, your throwing away good money; by saving for a 20% down payment, you minimize extra monthly mortgage costs and hold onto a bit more spending money.
A credit score above 720 will also save you money on your mortgage.
Another way to keep your mortgage low is to strengthen your credit score before securing your loan. Everyone knows that a stellar credit score is the best way to avoid paying higher mortgage interest! So, avoid large purchases as you consider buying, use your calendar to make sure you’re paying bills on time, and do your best to pay down credit balances (the lower your balance, the better your credit).
Consider your commute
Spending hours in your car, sitting through rush hour traffic, and wishing you were still sleeping can have a serious impact on your daily mood. Maximize the time you get catching Zs and spending time with loved ones by prioritizing your daily commute throughout your home search. Even the perfect home may not be worth 3 hours, round trip!
Become an expert on home values and your local market
Before Getting your heart set on a type of home you can’t afford, get to know your local real estate market with an open mind. Knowledge is power – especially when buying home. Research average home prices online with guides like this Denver Real Estate Infographic and check Zillow frequently. Once you have a good overview, begin visiting as many open houses as possible to see what price points look and feel like in person. By creating a solid knowledge foundation, you’ll be well-equipped to make an informed decision around one of the most important decisions of your adult life!
Prioritize your needs and wants in a home
In low inventory markets, like this one, prioritizing your new home needs and wants has become essential. Finding a house for sale within your budget that meets your needs but misses your wants is likely worth making an offer on. Be clear and realistic with yourself so that you can snatch up the gem when you find it.
Choose your neighborhood carefully
Your neighborhood will influence your everyday and life and long-term lifestyle. From running errands to leisure time, your neighborhood really sets the tone! Though you can upgrade aspects of your home as the years go by, it’s stuck on the street and in the neighborhood that it always was. Spend several hours walking, driving, dining, shopping, and commuting to and from any neighborhood you may be considering to get a feel of it this is the right spot for you.
Select a stellar realtor
The right realtor can save you thousands through skillful negotiation and can protect you from unforeseen issues that may arise. Make sure to read online reviews and meet the realtor in person before the selection is made. Furthermore, meet with a few realtors so that you can make constructive comparisons.
Stay within your budget!
Budget carefully when purchasing a home! Consider all monthly costs and allow for fun, as well as unexpected costs. When all of these costs are accounted for, calculate how much income you have left. Your monthly mortgage payment (plus HOA fees) should remain below this benchmark. Your lender can help you convert this monthly mortgage “allowance” into a home price by factoring in your down payment.
Now, stick with this number, even if your lender offers more! Home ownership can become the largest equity building action of your lifetime, but if it puts you in long-term debt, you’ll end up regretting it. Buy with a plan and your future self will surely thank your past self!