For many Americans, buying a house is a rite of passage. It is a symbol of independence and financial stability. But there are many things to think about before you start home ownership.
Apart from cultural symbolism, there are practical aspects to consider. For example, a homeowner invests the money that would otherwise be rented into a property that he can then sell or leave to his heirs. A home also usually offers more privacy than an apartment or condo.
However, buying a house is a major financial decision. For most people, this is the biggest purchase they have ever made. If you are ready to take the next step, it is important to consider a few points.
Buying a home is not just about price. Here are some financial points to settle before signing on the dotted line:
Maximum monthly payment: Most financial experts advise you not to exceed 25 to 28% of your total monthly income for housing. So if you bring back $ 5,000 a month, you should be aiming for a monthly payment of $ 1,250 to $ 1,400. You can use the mortgage calculator from Bank rate to check specific numbers. Depending on the interest rate, using the examples above, you could probably afford to buy a home between $ 250,000 and $ 276,000.
Private mortgage insurance: If you do not have at least 20% down payment, your lender requires you to purchase private mortgage insurance (PMI). Most lenders add the PMI payment amount to your mortgage payment. Make sure you know how much it costs to be able to include it in your budget.
Interview: When you live in a rental, your responsibilities and maintenance costs are minimal. Once you have purchased a home, you are fully responsible for leaking roofs, cracked pipes, faulty water heaters, yard work and other repairs. If you add a cushion to your monthly budget, this will help you save for these unexpected expenses.
Utilities: Depending on where you live, you may or may not be responsible for all your public services. The owners pay for electricity, gas, water, sewage, garbage removal and property taxes. Some neighborhoods also charge a recycling fee.
Owner Association Fee (HOA): Neighborhoods with homeowners charge fees ranging from 25 to several hundred dollars a month. These fees usually cover the cost of amenities in the neighborhood. Sellers are required to disclose if a house is part of an HOA. However, they may not be required to disclose monthly fees or rules, as HOA bylaws are available through public registers.
If you are comfortable with the financial aspect of buying a home, you must take into account all the pragmatic things you need to know, including:
Location: House prices may vary depending on the location. Limiting the neighborhood where you want to live can make it easier to find the home of your dreams. If a specific neighborhood is not very important, changing your home search to include more than one could save you thousands of dollars.
The size of the property: How many rooms do you need? Could you need more in the future? Can you live with a bathroom? Do you want a court? A large yard may look attractive when you look at a property, but you must maintain this lawn. Make sure to think about actually living in the home and not just about the aesthetics.
Criminal rate: In most states, real estate agents are not legally required to disclose crime rates in certain areas (nor can they publish them on their websites). If you want to know if a neighborhood is safe or what is the rank of your school, you must search for it yourself. Some useful websites include Large schools and City data. You can also check the website of the local police department for crime reports.
The age of the property: Older homes are more likely to need major repairs, especially if they have not been recently renovated. If you have attended a home improvement show, you know that many problems arise in older properties. Here are some things to look for and consider:
Roof or leaky windows
Questions from the foundation
Houses built before 1978 should be tested for lead paint.
Houses built before 1986 may have lead pipes.
There may be asbestos in homes built before 1980.
Older homes have character and many of them have been built with an art that you will not find in the most recent models. Just be aware that if you invest in an old house, you may be spending more money on upgrades and repairs in the future.
renovations: If a landowner has renovated a house, make sure that he provides documents proving that he has received the proper permits. If you buy a home with unauthorized additions or renovations, you are liable for higher taxes, or any other fees necessary to align the renovations to their code.
Will your furniture fit you? There is nothing more frustrating than moving into your new home only to discover that the box that has been passed down for generations is out of place … nowhere. Either plan a budget for new furniture or be more strategic when looking for a home to avoid this headache.
L & # 39; s future
How long do you plan to live in your new home? If it's your home forever, buy for the future, not just for the present. Look at everything from what your family might look like in ten years. Thinking about the future, you will prevent your dream home from becoming a nightmare afterwards. Here are other things to consider in the long run:
Zoning and development: It may be something you can not control, but you should inquire. Are major developments planned in the region? Will traffic on your road increase due to a major project planned by the city? Are you ready to deal with construction or increased traffic?
Investment potential: Does this property have the potential to increase its value? If you pick up a nice house at a lower price, you can increase the capital quickly if the market changes. Similarly, if you pay too much on a property, you risk losing money if the market changes in the opposite direction.
The purchase of a house is an important decision – and expensive -. So take your time, research and limit what you want so you do not regret your purchase in a few years.