We all like to think that we would go into the home buying process in a logical and coordinated manner, but let’s face it, home means possibility, and the prospect of becoming a homeowner is an exciting one. However, you don’t have to let your emotions take over! Check out our top 4 things to know before you start house hunting, so you can keep your cool and make the best financial decisions for you and your family and find a home that is perfect for all the possibilities it will bring.
Know Your Needs
There are many reasons to buy a home and they vary from person to person. To you, a home could mean many things, like a place to make new memories, room for your family to grow or a foundation for your future. Before you decide to go house hunting, you should consider what you need from your home. Consider your family and if it may be growing in the future to determine the size of home you might need. Think about how much home maintenance you are prepared to do, and think about proximity to work, schools, shopping and other places you may be traveling to often. Knowing your needs before you begin house hunting can help you narrow your search and ensure you are looking at the right homes for your situation now and in the future.
Understand What You Can Afford
Owning a home is a lot more than just a monthly mortgage payment. There are other costs that come with the home purchase process, like closing costs and the down payment, and even more costs once you become a homeowner. When you own your home, you have to be prepared, at the least, to pay:
- Homeowners insurance
- Mortgage insurance if you put less than 20% down
- Property taxes
- Maintenance and upkeep
Understanding how much you can reasonably afford to spend on a home each month for the next few decades can be difficult, but experts agree that your housing expenses should never exceed 30% of your income. For example, if you make $3,000 per month in income, your housing expenses should not be more than $1,000. If you pay more than that, you may find yourself in the undesirable position of being house poor.
Prepare Your Credit
Unless you hit the lottery, you will most likely need a mortgage to buy your home. Mortgage lenders look at many things when determining if they can lend to you, and how much they are willing to loan. One of the biggest financial health indicators that they check is your credit, and that’s why maintaining good credit and a good credit score is so important. In the months, and even years, leading up to your home purchase, you should try to get your credit in good shape by:
- Always paying bills on time
- Keeping your debt-to-income ratio low
- Paying off credit cards
Make sure to check your credit regularly so you can spot any errors on your credit report before they cause problems for you. Errors aren’t uncommon, and if you find any, getting them removed is a great first step toward getting your credit in order. The better your credit, the better your mortgage terms, which can save you thousands of dollars in interest in the long term.
Buying a home in today’s market is a challenge for many reasons, but the fact that homes tend to sell quickly is one of the biggest hurdles. A home that you see one day may be under contract the next, so it is important to be both prepared and flexible before you begin your house hunting. Work with your real estate agent to see homes when they are available, and don’t turn down showings just because the home doesn’t look exactly like the house of your dreams. Be ready to go look at homes that you might not think are right at first—what you find just might surprise you!
Home means more than just a place to live. Learn more about what possibilities home can provide for you, and how the NC Housing Finance Agency can help make home ownership more affordable at www.HousingBuildsNC.com.