How exciting! You’re about to go into so much debt that it could take you 30 years to get out of it -kidding (kind of)˳ You’ve probably heard that real estate is a great investment˳ And it totally is! But, in some cases buying a house can be a nightmare in disguise˳ You never really feel like you’re ready to buy your first home – or you might not even know what actually goes into buying a home˳
Whatever the case, we are here to give you the low-down on what you should know before buying your first home˳ If you check off all these boxes then your first home purchase will go easy breezy!
GETTING APPROVED IS MORE THAN JUST YOUR INCOME
Before you even begin thinking of purchasing a home you need to make sure you’re even approved˳ A family “knew” the amount they wanted to spend on a house and what they could afford˳ But, they didn’t realize the approval process was more than just what they wanted to spend!
There are multiple different factors that go into a pre-approval process˳ The main ones are:
Income:
Based on your income, they’ll figure out how much you can afford˳ The higher the income, the higher the loan˳ That doesn’t mean that if you have a low income you won’t get approved for a loan˳
Job Length:
Typically you need to currently be at the same job for 2 years or more˳ This isn’t the time to be switching jobs or trying to figure out your career path˳ They want to see consistency˳ We are not saying you can’t get a loan, because it can be done˳ You’ll just have to jump through a lot more hoops if you’ve recently switched jobs in the last 2 years˳
Credit Score:
Using your credit score they can figure out how “loan-worthy” you are˳ Just make your payments, people˳ If you don’t make your payments they’re not going to loan you the money˳
THERE’S MORE EXPENSES THAN JUST A MORTGAGE PAYMENT
You’ve got your pre-approval back, and you’re pleasantly surprised that they approved you for more than you thought˳ This is where home buyers make the SINGLE biggest mistake˳ Purchasing a house at the max they were approved for˳
If you can take away anything from this post then we want it to be this – DO NOT purchase a home for the max amount you are approved for˳ There’s a reason that it’s your max amount˳
If you’re barely making ends meet just making your mortgage payment, what happens when some unexpected expense comes up such as a job loss or medical bills (and yes, it CAN happen to you)˳ There’s always something that comes up and you definitely don’t want to be scrambling to pay your mortgage˳
EXTRA COSTS
Not only do you have to consider PMI, but closing costs˳ You’re going to spend anywhere from 2%-5% of the home price on closing costs˳ If you feel completely comfortable and confident that you can pay for the closing costs and put a decent amount down (preferably 20%) then you’re pretty safe˳ No use paying more than you should just because you didn’t want to take the extra year or two to save˳
HAVING AN EMERGENCY FUND WILL MAKE OR BREAK YOU
We know you think that nothing is going to happen to you and life will always be fine and dandy˳ But we hate to tell you that you’re wrong˳ We just want you to be prepared and smart˳ Typically, you need to save 1% of your home costs for on-going maintenance every year˳
IT’S NOT WORTH IT IF YOU’RE THERE FOR LESS THAN 5 YEARS
It’s been proven that you need to be in a Home for 5 years to start breaking even˳
That first 5 years is basically just paying the interest˳ At that time you haven’t even made a dent in your principal˳ You would now have to try to resell at the purchase price you bought for or to get any money back, try to sell for higher˳ Doesn’t that sound like such a hassle?!
There’s so much upfront cost that it’s not even worth it if you’re not planning on sticking around for that long˳ In this case, renting may be a better option˳
YES, THERE IS SUCH A THING AS A SELLERS AND BUYERS MARKET
The market you’re in can extremely affect your buying power˳ Builders can sell their homes ridiculously overpriced and have them snatched up in days˳
In a buyers market you have a lot more leeway˳ You have the deciding power of finding a home that you truly love (and not just picking one because you can’t find anything else)˳ You also have the opportunity to even come in UNDER asking price˳ If you know that you’re in a seller’s market and are afraid of paying way too much for a house, it doesn’t hurt to wait it out˳
YOUR GUT KNOWS MORE THAN YOU DO
Gut feelings go a long way˳ Your gut is a lot smarter than it takes credit for, and you should listen to it˳ Do you feel ready to purchase your first home? Is it something that is truly in your families best interest or do you just want a home because everyone else is doing it˳
You may never feel totally confident about purchasing a home (and that’s completely normal) but just make sure you’re prepared˳ Buying your first home can really be a great experience and an even better long-term investment˳
Whatever you choose, we hope these tips helped you make a decision and be a little more informed about what actually goes into buyin g your first home˳
For more information please visit – Mantri Developers Website
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