We all dream of one day buying our first house and no longer having to answer to a landlord. But what do you know about buying a house? This is going to be the biggest purchase of your life, and you want to avoid any potential pitfalls. Not to mention, you’re hopefully going to be living in this house for many years, so you want to know that the building is sound.
Here are a few things you should know about buying a house.
Can you afford to buy?
This is the first, most important question, and it is usually where most discussions about buying a house end. Chances are if you’re struggling to pay your bill while you’re renting, you won’t be able to afford mortgage repayments. In which case, you should take the time to save up for a down payment.
Where are you going to live?
Once you have a down payment saved up, you can start looking around at houses you might like. When planning to buy a house, it makes sense to plan for long-term ownership. Suppose you need to put a lot of work into the house; if you sell it after three years there is very little chance that you will break even. If you’re committed to buying, look for a house someplace where you can reasonably assume you’re going to stay for a minimum of five to seven years.
What kind of mortgage can you afford?
When you’ve calculated a budget for buying a house, you should seek out a reputable mortgage lender. The more money you have for a down payment, the better deal you can get. The 43% debt-to-income ratio rule is generally used by the federal housing administration (FHA) as a guideline for approving mortgages. Although it can often change depending on market conditions, this ratio is the best way to determine if the borrower can repay the mortgage. You should make your calculations based on what you can definitely afford. It won’t do you any favours if you factor in any future income; you might not get that job promotion or raise that you were promised, and then you’re trapped in a repayment plan you can’t afford.
Is it a fixer-upper?
Some homeowners tell you “I’d like to sell my house fast,” but you shouldn’t let them pressure you into rushing the process so you miss that the house needs work. Of course, fixing up a house yourself can increase the value of your home, but that’s only if you can afford to do it in the first place. All homebuyers should get an inspection of the house before signing any documents.
How much will you have afterwards?
Just because a house is in perfect condition when you buy it, doesn’t mean it will always be that way. Now that you’re a homeowner, you’re in charge of repairs. Make sure you’ll have money set aside for any accidents, or you could do your own repairs where possible.