There’s a lot to consider when you’re buying a house – from deciding whether you’re ready to negotiating and signing the contract. When you buy, keep real estate law in mind and know that you may need to hire several professionals to get the best deal.
You may also want to consider:
How Much You Can Afford
In any purchase, the cost is a major consideration. If you cannot afford something, you shouldn’t buy it. Determining whether you can afford a home is more complex than budgeting for other purchases because you will need to consider more than just the purchase price.
The costs of owning a home can include real estate taxes, homeowners’ insurance, HOA fees, maintenance and repairs, and the costs of buying, selling, and moving. When you calculate how much you can afford, keep these costs in mind. HowStuffWorks has a great breakdown of applications and closing costs you should consider.
Calculate Your Debt-to-Income Ratio
Usually, the best place to begin is calculating your debt-to-income ratio. Compare your income with your expenses and choose a maximum mortgage that is 28% or less of your monthly income. Don’t forget to consider your down payment. Putting 20% down can help lower your interest rates and keep you from paying private mortgage insurance.
Keep in mind that the housing market, the economic outlook, and even the time of year can affect the price of your home.
If it’s not the right time to buy, waiting (and perhaps saving more money) is better than purchasing a house you cannot afford.
Your Lifestyle Needs
You should not buy a house unless you are planning to hold onto it for a while (unless it is an investment property, but that’s a different story). On average, it takes 4 to 7 years to break even on a home due to the costs of the transaction and ownership.
As such, when buying a home, you should consider your needs now and in the future. The house you choose should be the house you want to live in for the next 5 years of your life. Think about your job, your partner, and your children (if you have them or are planning to have them). How many rooms will you need? How big do you want your kitchen to be? What is the neighborhood like? Are there good schools and work opportunities nearby?
If you are not married, think twice about buying a house with your partner. Family law courts help married couples split their property during divorce and legal separations, but if you and your partner aren’t married, you will need a contract to protect each of your interests.
The Home Inspection
Whatever you do, do not skimp on the home inspection. This crucial step can help you uncover construction defects and other serious issues before you purchase a home. Home inspections frequently uncover mold, rot, pest issues, roof damage, improper insulation, faulty wiring, asbestos concerns, structural instability, and more.
Make sure you know exactly what you’re purchasing. Although the seller has a duty to disclose significant problems, you have a duty to do your due diligence.
Calling off a real estate transaction is difficult, so don’t wait until after you purchase a home to discover a serious problem.
Your Power as a Buyer
Ultimately, you do not have to buy a home if the decision is not right for you. As the buyer, you hold the majority of the power in real estate transactions. Do not be afraid to negotiate, and if you can’t get a good deal, do not be afraid to walk away.
You should never feel pressured into buying a house – from the seller, society, or anyone else – and there is no such thing as a standard home buying experience.
To get the best deal, you should work with a trusted realtor and have a real estate attorney review your contracts and agreements.