Making the decision to purchase a home is easy, but getting ready to go through with it can take some work.
For most prospective buyers, this decision is based on a need for more space along with the desire to become a homeowner and the ability to meet the responsibility of a monthly mortgage payment, instead of rent. Buyers who choose to make the following five additional preparations are helping to guarantee themselves a positive, less stressful home purchase and ownership experience.
1. Has a Plan for the Future
Buying a home can be a great financial move for many people. However, when expenses such as repairs, maintenance, insurance, taxes, and other costs are added in, buyers certainly need to be prepared for a lot of scenarios.
Typically, it will take a few years to build enough equity in a home for an owner to be able to “cash in”. In order for prospective buyers to see real value in owning a home, they should have an understanding of where they will be in the coming years, and how their needs may evolve.
2. Is Pre-Approved for a Mortgage
Another important preparation that should be made before prospective buyers begin to search for a home is to choose their lender, apply for a mortgage, and make sure that they can get pre-approved for a mortgage with reasonable terms. This will not only strengthen the buyer’s negotiating position when they do make an offer, it will also help them conduct their search within the best price range for their financial position.
3. Has Steady Employment & a Detailed Budget
The monthly principal and interest payment is only a part of the total cost of home ownership. Prospective buyers who look at the total cost of ownership for each home they are considering will be better able to choose one they can truly afford. To do this, prospective buyers should take time to find and add up all costs for each home, including (but not exclusive to):
- the amount of the expected mortgage payment
- private mortgage insurance premiums (if any)
- homeowner’s insurance premiums
- property taxes
- utilities, including water, electric, and sewer services
- any homeowners’ association (HOA) fees or other recurring fees or assessments
- expected annual maintenance costs
4. Understands the Real Estate Market
Purchasing a home at the top of the market can put buyers into a precarious equity situation should the market value drop significantly in the first few years after purchase. Sometimes referred to as being “upside down”, homeowners who find themselves in this position may not be able to sell their home later without paying out-of-pocket. When preparing to purchase a home, taking time to discuss the local real estate market with a real estate professional can help buyers avoid considering homes that could put them into this uncomfortable, negative equity position.
5. Is Working With a Real Estate Agent
Even though teaming with a trustworthy real estate agent appears last on this list, prospective buyers should know that they can rely on the right agent to offer helpful guidance with all aspects of the home buying process. If you are thinking about buying a home, a great agent can make it easier for you to find and close on a home that fits both your needs and your budget.