What You Need to Know When Buying a Home
Purchasing a home can be one of the best experiences of your life. It can also be a very stressful time. Most people don't know the many things that need to be considered when making this major purchase. If not done correctly, a home purchase can possibly create many headaches down the line. It is crucial that first time home buyers do their homework and prepare for this process thoroughly. Here are some things every homebuyer needs to know when buying a home.
Buy what you can afford
Purchasing a house can make you think you need everything. It's easy to get caught up viewing a house that has much more than you originally planned to purchase. The house that you can afford may not necessarily be the house that the mortgage company approves you for. Many people are often approved for three or four times what they may actually need. It's always important to leave room for the unexpected. Someone may want to change jobs or start a business. It's nice to have a little room to handle life changes without worrying about how you are going to pay the mortgage. Many lenders recommend a mortgage that is about a third of your gross income or around 28%.
Don't forget about your student loans
Student loan debt can make it much more difficult to buy a home. Mortgage companies will treat it like real debt when you are purchasing a home. In the past first time homebuyers were able to discount their student loan debt as long as they could show that it was being deferred for more than 12 months. Recent changes in law have caused homebuyers to receive a 2% fee, regardless of their loan status. If you are in the market for a home and you have student loans, either get them paid off or work on getting a income-based repayment plan so that you can get into a home.
Know what you want
It's a good idea to know exactly what you want in a house before you begin viewing homes. Home many rooms are you looking for? What square footage do you want? What style of house do you want? Knowing what is on your list can help you narrow your search. It will also keep you from buying more house than you really want or need. Knowing what you want will prevent you from passing on a house that really has all the things you want.
Think about your commitment
Purchasing a house is a major commitment. It's really important to think about where you are in your life before purchasing a home. If you are purchasing a home with someone who you are not married to make sure you have a plan if things don't go the way you hope. If you sign for a mortgage you are still responsible regardless of what happens in your relationship. It's usually a good idea to have a plan in writing regarding the mortgage and title.
Don't forget the inspection
A home inspection is one of the most important parts of purchasing a home, especially when the home is not new. A thorough inspection will help you to find any thing that could potentially go wrong once you move in to your home. It is also a good idea to understand what warranty you have on things like you water heater, hvac and other major household items. If you are in a unique place a warranty may be even more important. Not having inspection or a home warranty in Alaska, for example, could be a major problem years later.
