Are rising rents finally getting to you? Are you tired of sharing a building with a few – or hundreds of – strangers? Are you done listening to your neighbors stomp around upstairs at midnight? (Are they bowling? They might be bowling.)
Then it might be time to buy your own home. While the intentions to buy your first home are often borne out of feelings just like this – you’re just fed up with being a renter – they shouldn’t be the deciding factors. In fact, there are a number of things you should consider before taking the plunge into homeownership, and the process is a long one. The good news? It doesn’t have to be confusing, and it doesn’t have to be hard.
But for that to be true, take note of these important tips:
Buy for the right reasons
Homeownership can be one of the most rewarding investments you’ll ever make. But it has to be done for the right reasons – as we already touched on, there are plenty of nuisances that come with being a renter. These annoyances aren’t the reasons that you should be buying, though.
- You desire stability.
One of the best reasons to buy is for stability. The average mortgage comes in 15- or 30-year intervals. While you can certainly move before that time passes, you’ll need at least five to ten years in the home to make back the money you’ve invested upfront – and that’s for mortgages on the lower end of the spectrum. With that said, you should buy if you’re tired of your rents rising every year and moving on a yearly or biannual basis.
- You want the investment.
Homes are investments. Over time, your home equity can be used for a number of things, including renovations to your property. The best homeowners take pride in their houses, their neighborhoods and their communities. They make upgrades that not only increase their property’s value, but their neighbors’ as well. They take part in their community and build memories in their home. When you’re browsing for listings and want to become invested in the areas you’re searching, you know you may be ready to buy.
- You have the budget.
One of the most important deciding factors for homeownership is your financial stability. Do you have the budget to buy? If so, then the time may be right. At the moment, monthly mortgage payments are roughly the same – or cheaper – than monthly rental payments, depending on your location. What you should be checking out is how much money you have in savings. The more, the better, because the more you put down, the more you will save on interest in the long run. You’ll also need more in the bank as a security blanket, in case you need it. Month one in your new home could bring a leaky shower and a replacement stove, and you’ll be glad you had a few thousand left to dedicate to these upgrades.
Buy for these reasons, not because your upstairs neighbor has a midnight bowling league.
Plan out your time
Buying a home should take a long time – you don’t want to rush through this process. During many steps, you won’t be able to rush even if you wanted. There are various lending requirements and legal hurdles that necessitate a deep breath.
For your average buying process, the steps look like this:
- Find a real estate agent.
- Get pre-qualified for a mortgage.
- Look at listings and open houses.
- Make an offer (or offers).
- Have your offer accepted.
- Pick up a home insurance policy.
- Finalize the mortgage and choose your terms.
- Conduct a home inspection.
- Sign at the closing.
- Move in!
These steps take place over months, not days. That means you need to plan ahead, especially if you’re a current renter. Depending on when your lease expires, you may end up paying a month or two of rent on top of your mortgage. Make sure you can afford it. Otherwise, start your home search at least three months in advance and be prepared to renew your lease if the home of your dreams isn’t on the market. It’s better to find what works for you than to try to rush.
“The right people make all the difference when buying.”
Work with the right people
Finally, it cannot be understated that working with the right people is a crucial part of the homebuying process. The two most important people are your real estate agent and your lender. The right lender will make your search incredibly easy, since he or she will walk you through all of the financial steps involved and put to rest any concerns or uncertainties you had about your mortgage.
Best of all, the right lender can help you find the mortgage that is perfect for your needs, or explain some more nuanced products – such as an adjustable rate over a fixed rate – and how they’ll impact your monthly payments.
Your real estate agent will act in a similar capacity. He or she will be your go-to contact for all things homebuying. Agents can recommend other professionals to work with, like a home inspector, plus they’ll do the legwork when it comes to finding listings that fit your criteria. You’ll end up calling your agent a lot during this process, and you’ll be happy you’ve picked a good one.
There you have it – three key tips to buying a home – buy for the right reasons, plan out your time and work with the right people. If you check off those boxes, you’ll be well on your way to landing the home of your dreams. Happy hunting!