New Beginnings: 5 Important Things to Consider When Choosing a New Home

orange houseIn 2017, Americans bought over six million new and existing homes. For many of these people, such a move is the purchase of a lifetime. Hopefully, this is the place where their children will grow up and where the family will make many happy memories. Needless to say, therefore, the decision is a very, very big one.

Before making any firm choices, it’s always best to have as much information as possible. Many people visit Buyer’s Corner Realty to get such information. Here are five of the basic questions that most of these potential buyers need to have answered.

Do I Really Need a 20 Percent Down Payment?

Strictly speaking, there is no such requirement for a loan. Many lenders offer 90 or even 100 percent financing. But unless the buyer has a 20 percent down payment, the bank almost always requires purchase mortgage insurance.

As a rule of thumb, PMI is 1 percent of the loan amount. Essentially, PMI drives up the interest rate by one point. So, if the paperwork says 3.5 percent, you are actually paying 4.5 percent after you add PMI. These extra payments last until at least 80 percent of the loan is paid off, which means you’ll be paying extra for many, many years.

So, practically speaking, you do need a 20 percent down payment. With some spending discipline, it is not too hard to save up for this payment. Such savings also helps you develop good habits for being a homeowner. After all, when occasional repairs need to be made, you are responsible for them and not your landlord.

Do I Need to Shop Around for a Mortgage?

Buying a house is an exciting time. Shopping for a house is exciting as well, but shopping for a mortgage is boring. For this reason, many people only “shop around” on a cursory basis. They look at a few offers, compare the best ones, and decide. They may assume that all banks are pretty much the same. After all, their credit scores will not be any higher or lower.

But with a 240-month mortgage, a little bit makes a big difference. Just a quarter of a point could mean hundreds of dollars a year. Instead of giving that extra cash to the bank, you could use it in your new life as a homeowner.

I Should Look At Houses That Are In My Budget, Right?

If you can afford to buy a new sofa, there’s not much point in looking at discount stores. Instead, explore the options that are within your means. Otherwise, you may spend a lot of time wondering “what if.”

But buying a home is completely different than buying a sofa. A living room couch is not nearly as big a financial commitment as the living room it goes into. So, a better approach to house shopping may be to start well below your budget. If nothing stands up, move your ceiling up a little. Repeat this process until you find the house you want, and not the house you think you can afford.

I Have More Space, So I Can Have More Stuff, Right?

Yes, most houses do have more space than most apartments. But the more stuff you collect, the faster that space will fill up.

Most people try to follow the one-in, one-out rule. For every item of furniture, gadget, or anything else that comes in, a similar item must go out. Such an approach keeps your house from becoming cluttered and maximizes the living space you paid so much to enjoy.

Additionally, the one-in, one-out rule keeps a little extra money in your pocket. That small amount of cash could be quite useful in many situations.

I Can Do This Alone, Can’t I?

Not really. Make an effort to get to know your new neighbors, especially the ones that live just a few doors away. They have probably lived in the area a lot longer than you have, so they are an important resource. Moreover, these individuals can watch your house while you’re away, watch your pets in a pinch, and overall be pretty solid friends.

A home purchase is a big decision, so tread lightly and with confidence.

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