Owning a home is a huge milestone in any person’s life and an essential part of the American dream. It’s an exciting stepping stone, it goes without saying — not to mention that under the right circumstances, it can be a sound investment of your money. Before you go shopping, though, there are a few important things to know about buying a house.
6 Things to Know About Buying a House
1. It’s Going to Cost You More Than You Think
No, seriously. Take whatever you thought you were going to spend and add on another $5,000 to $10,000.
Aside from houses being expensive, period, there are always unforeseen costs. You’re going to need to fix something, replace something, upgrade something, or you’ll owe a fee you weren’t aware of. Random people are going to come at you from every direction with their hands outstretched asking for your hard-earned money.
Don’t panic, because this will pass. Buying a house is a ton of money upfront, but once you get past that hump, your monthly expenses — your mortgage, HOA, utilities, etc. — won’t change much.
2. Looks Can Be Deceiving
Buying a house that’s pretty is important. Buying a house that’s well-built and functioning properly is important-er. Does your potential new home have clean carpeting and freshly painted walls? Sweet! What about the plumbing, heating and air conditioning, and water heater?
These things are hidden to the house hunter, but if you go with a home that has faulty appliances, you’re in for a big bill later on down the road. In addition to aesthetics, make sure the inner workings of your potential house meet your standards.
3. Consider How Long You Plan to Stay
Do you plan to move again within the next five years? Then you might want to reconsider buying a home at all because that’s roughly how long it takes to recoup your costs. Plus, selling it after less than two years of living in it could spell bad news for your taxes.
If you don’t plan to get comfortable and stay put for a while, renting might be the better option for you.
4. Look Beyond the House
Finding the perfect house is a huge victory, but there are other factors to consider. Is the area quiet, or does the house sit right off a major road or highway? What are the crime rates like in the area? If you have kids (or plan to have kids), is it a good school district? Where in the neighborhood is the house situated? Some people swear if the house is on a corner lot, it’s likelier to be broken into.
It’s important that you have a wider perspective when determining if you’ve found the best house for you.
5. Review All of Your Finances
Any way you slice it, buying a home is expensive, but that’s not an excuse to be financially irresponsible.
Before you start house hunting, you need to ensure your finances are in order. Beyond the purchase price of the house, do you have enough money set aside for the down payment? Nerdwallet says this is about 20% of the purchase price.
You’ll also want to make sure you’re in the best position possible to secure a mortgage. Do you have money in your savings? Banks don’t like to loan money to people who are living paycheck to paycheck. What other debts do you have? Are they under control? Have you missed any payments or been late?
The better prepared you are before making a move, the easier the transition will be.
6. Shop Within Your Means
Well before buying a home, you should know one thing for certain: what you can comfortably afford each month — “comfortably” being a key word here.
You should not be shopping for homes beyond what you can pay back on a loan each month. First, get pre-approved for a loan, so you’ll know how much you’ll get, maximum. Second, take a look at your monthly income and expenses to know what you can afford.
Don’t push the boundaries! You might have $2,000 “to spare” each month, but that doesn’t mean you have to put all of it toward a mortgage. Living slightly below your means will do wonders for your stress levels.