Buying a new home is very exciting but it can also be stressful and a little scary. Follow these tips to prevent buyer's remorse an ensure that you purchase a home that you love at a price you can afford.
1. Understand what you WANT. Before you even start looking at houses, ask yourself the following questions:
- How much can I afford to spend on a monthly mortgage payment?
- In what area, neighborhood or location would I like to live?
- How many bedrooms and bathrooms do I need?
- What size (square feet) home do I want?
- Do I want a specific style or floor plan?
- Do I have other special requirements such as location/quality of schools or distance from work?
- What does my future look like? Will I be having kids? Will I be an empty nester soon?
- What hobbies do I have? Will I need extra space to for my hobbies (boats, cars, woodworking, craft making)?
2. Understand what you NEED. Create a list of the things you LIKE and DISLIKE about your current residence. From those lists determine what you need in a house and what you don't need or want. It often helps to rank your needs in order of importance. These lists will help you to better understand what you are looking for and help you convey your needs and wants to your Realtor.
3. Understand how much you can afford. If you haven't already done this, create a list of all of your weekly, monthly and annual expenses. This list should include your rent or current mortgage payment, utilities, vehicle expenses, loan and credit card payments, insurance, retirement savings, child care, groceries, vacations, and any other expenses you many have. Subtract this total from your take-home pay and you will know how much you can afford to pay each month.
4. Understand home financing. Your monthly mortgage payment is based on several factors:
- The price of the house
- Your down payment
- The amount you will be financing
- The interest rate and points of your loan
- The terms of the loan (15-year, 30 year)
- The type of your loan (fixed, variable)
It is important to know the relationship between these items and how they affect your mortgage rate. Knowing these specifics will help you better communicate with your lender and assess what loan will be the best for your situation.
5. Be Prepared. Before you start looking at homes, find a motivated lender. If you don't have a lender, Your Realtor can provide you with names of reputable lenders in the area.
It is Extremely important to get a pre-approval letter from a lender before you start looking for homes. A pre-approval letter gives you more power to negotiate the price and terms you want. Sellers will take your offer seriously because they know you can close on the transaction.
6. Hire a Professional Realtor. I Realtor will help you:
- Help you avoid costly mistakes
- Find the right house for the right price
- Find a mortgage lender
- Negotiate the best deal for you
- Make sure that your best interests are looked after
- Coordinate all inspections, appraisals, escrow and title companies