Whether you’re a first time home buyer or a seasoned real estate investor, buying a home is an exciting process. However, there’s also a lot to consider when you decide to buy a home. So before you begin your search for the perfect property, here are four questions you should ask yourself. Check here for your free 1st time home buyer guide.
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What do I want?
Take the time to figure out what type of home you want to buy. From single family and multi family homes to condos and co-ops, there are many different options on the market and it’s important to choose the type that best fits your needs. Figuring out the city or neighborhood you want to live in is equally important. While a home might have all of the amenities you’re looking for, factors like crime rate and proximity to highways can impact the overall home owning experience. A good idea is to list out and prioritize your needs (e.g. large backyard, great school system) before you begin your home search.
What can I afford?
As a first time home buyer the rule of thumb is that you should never spend more than 30% of your monthly income on a mortgage payment. An alternate rule states that you can afford to buy a home that runs about two-and-a-half times your annual salary. For a more tailored look at what you can afford, use an online mortgage calculator to see what your monthly mortgage payments would be if you bought a home today or better yet speak to your bank or a mortgage broker to see what you qualify for.
Am I financially prepared?
A few months before you start searching for a home, review your credit history and make sure it is in good standing. Get copies of your credit report, ensure that it’s accurate, and fix any issues you discover. It’s likely that you’ll also want to get pre approved for a home loan, which will put you in a better position to make a serious offer once you find the right property. Pre-approval from a lender is based on your credit history, debt, and income.
How do I make the best offer possible?
Do your research! Your opening offer should be based on the sales trends of similar homes in the area. So before making your offer, get online and review the selling prices of comparable properties. If these properties sold for less than the current asking price of the home you’re looking at, you can feel comfortable make a offer that’s slightly lower than what the seller is asking.