Whether you’re a first-time homebuyer 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. So before you begin your search for the perfect property, here are some questions you should ask yourself.
1. What Do I Want?
Take time to think about what type of property you want to buy. From single-family homes to condos, there are many different options on the market and it’s important to choose the best fit your needs. Understanding the town or neighborhood you want to live in is equally important. While properties may 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 search.
2. What Can I Afford?
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 property 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.
3. Am I Financially Prepared?
Before you start searching for a new home, you should review your credit history to make sure that you’re in good standing. Get a copy of your credit report, ensure that it’s accurate, then fix any issues you discover. You should also get pre-approved for a home loan, which will put you in a better position to make an offer once you find the right home. Pre-approval from a lender is based on your credit history, debt, and income.
4. How Do I Make the Best Offer?
Do your research and speak with your Realtor. Your offer should be based on the sales trends of similar homes in the area. So before making your opening offer, make sure your real estate broker reviews 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 bid that’s lower than what the seller is asking.