by Susan Paige
It’s that wonderful, exciting, and scary time of your life. You’re planning on buying a house!
With the average home price in the US being over $226,000, it’s clearly a huge financial commitment. If you want to make your dream a reality, it’s time to prepare.
Don’t make the same mistakes as thousands of other first-time home buyers. Let’s look at some of the critical factors to consider when buying a house.
9 Factors to Consider When Buying a House
Buying a house is a big decision that shouldn’t be taken lightly. Like with any big purchase, you need to know exactly what you’re getting, and how much it will cost. Here’s what you need to keep in mind.
1. Your Credit Score
This point is number one is because of how much your credit score will impact your bottom line. You may be thinking: “7% interest is basically the same as 5%”, but you’d be wrong.
A 2% difference on a $250,000 house is an additional $5,000. That is money worth saving. If you have a low credit score, see if somebody can co-sign your loan lower your interest rate or work on improving your score before you make your home purchase.
2. Your Price Range
One of the most common and costly financial mistakes people make in their lives is purchasing a house above their means.
Don’t think of this as a lump sum payment, because it isn’t. Your mortgage will last you the next 20-30 years, on average.
Make sure you know the duration of the loan you are getting, how much income you are expecting for that span of time. Your mortgage shouldn’t exceed 30% of your monthly household income, so plan to go below that price.
Because this is a potential lifetime commitment, you’ll also want to consider your future plans. Are you going to get married, have kids, stay at your current job, or move to a different area? Make sure all potential life changes have been considered, and whether or not the house fits your needs. Look at some simple rules to determine your home price range.
3. The Lenders
Make sure you get pre-approved by a lender before making any purchase but also don’t stop fishing after the first nibble! Take the extra time to shop around and see which lenders can give you the best deal.
You aren’t just committing yourself to a new home, you’re committing yourself to the lender as well. See who can offer you the best deal. Do your research on lenders in your area, and learn more about why mortgage lenders recommend pre-qualifying.
4. Every Expense
Purchasing a house comes with a lot of added hidden fees and expenses, so be prepared. Ask your realtor and lender about any fees that may have been left out, and prepare for them.
Also, make sure you’re aware of any issues with the house that need to be repaired. Spending the extra cash to get the house inspected is well worth it once you are seriously considering a particular house.
Don’t forget about moving costs, either. If it’s a long haul, get an estimate right away and add that cost into your budget!
5. What You Want
This is step one before even looking at a house. Be sure you know how many bedrooms and bathrooms you need, as well as extra amenities.
Do you need a home office? Are you looking for a breakfast nook? Do you want a solar-powered electric system or a gas stove? Is there room for a fireplace insert?
These are the kinds of questions you’ll want to ask right away. If you know your deal-makers and your deal-breakers, shopping for a home will be easier and pay off in the long run!
6. Aesthetics are Only Half the Battle
Don’t focus on the nice paint job. Look beyond that and make sure that the house is structurally sound. This is what inspections are for, but if you can’t afford one, keep a sharp eye out.
Cosmetic issues like paint jobs are fairly inexpensive to fix, especially compared to plumbing or kitchen repairs. So, when it comes down to it, don’t worry too much about aesthetics.
Water is one of the most expensive issues. Poor plumbing, flooding, and sump pump issues are devastating on the wallet. Check out these tips for finding the best flood insurance before you buy your home.
7. Other Debts
Make sure you’re factoring in your student loans, car payments, and other monthly payments. Are you able to afford the mortgage payment on top of all these?
If your current rent is comparable to the desired mortgage payments, you should be in the clear. Just be certain before making any final decisions.
8. Your Realtor
You may not be the type of person to check Yelp reviews for every restaurant you try out, but this is a much bigger decision.
Find a trusted realtor who knows your area and will work with you to find the best place to fit your needs.
Don’t just do your research online, talk to friends, family, or coworkers who have bought a home in the area and ask them their feelings about the realtor they used.
9. Your Furniture Plans
Now we get to the fun part! Make sure you know how much stuff you are bringing, and exactly where you’re going to put it.
If you have a lot of furniture, make sure it will all fit. Know the storage dimensions in your house as well so you know you have enough room. That one is often overlooked!
Next Steps
Now that you know the factors to consider when buying a house, make sure you are following them diligently to avoid any issues in the future. Remember, you only get one shot at buying this house, so make sure you won’t be surprised!
Once you find the right place that meets your criteria, and you’re sure you’ve considered it all, then get on it!
So, what do you think ?