The Expert Guide to Buying a Home

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Buying a house can affect the quality of your life in the long run. Aside from the money it costs you, the functionality of the house you choose to buy can also influence your and your family’s comfort. It can be challenging for anyone to enjoy their house if it’s too small for the family or has built-in features that are too expensive to maintain.¬†

With the number of residential properties available worldwide today, you need to be careful when choosing a home to buy. All of the money you spend on this kind of purchase can possibly go down the drain if you end up buying a property that doesn’t suit your needs or budget.¬†¬†

To make the home-buying process easier, take note of this expert guide: 

Pay Off All Debt and Establish an Emergency Fund

To avoid financial stress when you’re buying a home, take the time to pay off any and all debts you may have and then build an emergency fund first. Aside from the price of the home itself, keep in mind that you’ll have to pay for regular maintenance and choose from one of the top 10 home warranties. Having any existing debts but no emergency funds will make it very challenging for you to afford any of these.¬†¬†

Paying off debts is an achievable goal that requires you to create a budget, halt your credit card spending, and prioritize paying off your most expensive debt first. Creating an emergency fund, on the other hand, requires commitment because you have to drastically change your spending habits in order to save more money. You should also set a monthly savings goal to determine your progress.  

Buying a Home

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Determine How Much You Can Afford 

You may be overwhelmed the moment you decide to scout for residential properties by the many options available to you. Homes come in a wide variety of options today, which means that you can surely find one that suits your preferred theme, lifestyle, and budget. 

Before you head out and look for homes for sale, it’s always best to determine how much you can afford first. Looking at homes without having a set budget will likely cause you to overspend and experience financial stress for years.¬†¬†

Ideally, the house you’ll buy should have mortgage payments of no more than 25% of your take-home pay every month. For example, if your take-home pay is $5,000 every month, look for homes with mortgage payments that cost $1,250 or less. Moreover, you also have to consider the interest rates of your mortgage, taxes, and insurance when calculating your budget.¬†¬†

Choose a Lender 

Just as there are many homes available in the real estate market today, do you know that there are also many lenders to choose from? As a homeowner, you should exert time and effort to scout for at least three lenders and compare their services before you decide where to apply for a mortgage.  

One of the first things you should consider when choosing a lender is the interest rates. A lender that requires a low down payment but has high-interest rates isn’t the best option because you’ll end up spending more in the long run than what you’ve initially expected. Remember, paying for a mortgage is a long-term commitment, which is why you should work with a lender who offers low-interest rates.¬†¬†

You can easily determine which lender suits your budget by asking for a loan estimate. This document contains information on your loan terms, projected payments, and closing costs, making it easier for you to compare different lenders.  

Additionally, don’t forget to consider the customer service provided by the lender. Applying for a mortgage and making payments every month isn’t always easy, which is why you should choose a lender that makes the process easy and makes you feel comfortable to ask questions.¬†

Work with a Real Estate Agent 

Buying a home is a long process because aside from choosing the right residential property, you also have to compile several documents before, during, and after the sale. You might also have to negotiate with several homebuyers before you can come up with amenable terms.  

If you want to make the entire process smooth and easy, hire a real estate agent when buying a home. Paying for their services is a cost-effective investment because they can help you find the right home, ask essential questions of home sellers, and prepare all of the necessary documents. Real estate agents also have connections to countless individuals and businesses in the real estate market, and they can give you access to properties that aren’t marketed to the public yet.¬†

Similar to when you’re choosing a lender, you should also be careful in choosing which real estate agent to hire. Ideally, you should work with a real estate agent with years of experience in helping people find their dream homes and who is knowledgeable regarding the trends of the real estate market of your chosen location. They should also be able to provide a list of references so you can get feedback from their previous clients.¬†¬†

Buying a Home

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Start House Hunting 

Once you’ve settled your finances and chose a real estate agent to work with, it’s now time to roll up your sleeves and start house hunting. This is one of the most important and time-consuming phases of the home-buying process, as you’ll have to browse through the listings that your real estate agent sends you.¬†

For you to easily narrow down your options, it’s best if you list down several factors first before you start looking at homes. It’ll be easier for you to find the perfect home if you know what amenities to look for when choosing.¬†¬†

It’s vital that you consider the following when house hunting:¬†

  • Location: The location of the house is always an important factor to consider because it affects the day-to-day living of the entire household. Buying a cheap home that requires the family to travel for hours to arrive in their workplaces or schools can eventually result in expenses and stress. When house hunting, choose a home that is located near your place of work or your children’s school. The location should also be accessible to public transportation and has essential establishments, such as hospitals, pharmacies, and groceries nearby.¬†¬†
  • Neighborhood: Because you’ll be spending a lot of time in your home, the kind of neighbors you have will affect your mood for the day. It’ll be tough for you to work from home if your neighbors are noisy and nosy. Don’t forget to inspect the neighborhood of the home you’re eyeing to buy whenever you go house hunting. If you’re going to buy a home for your family, the neighborhood should be family-friendly. To assess the neighborhood, make sure to visit the area at different times of the day and get to know that people who have been living there for years. These will allow you to know the neighborhood better and help you determine whether a specific neighborhood meets your expectations.¬†¬†
  • Crime rates: Buying a house in a location where the crime rate is at an all-time high will prevent you from sleeping soundly at night. Instead of enjoying your new investment, you’ll likely end up being stressed all the time. One of the most important things to consider when house hunting is the criminal activities in the area. You can acquire this information by checking websites online or asking your real estate agent. Checking the prevalence of criminal activities in a specific area should be your priority because buying a house located in a crime-filled neighborhood isn’t worth the investment.¬†¬†

Make a Competitive Offer 

After finding a home that suits your needs and budget, you’re now ready to make an offer. If this is your first time buying a house, it’s best if you ask help from the real estate agent you’ve hired as they can determine how much you should offer and how you can negotiate terms with the seller.¬†

During this process, make sure to discuss with the real estate agent that you’re only accepting offers that are within your budget and never beyond. Never accept any compulsive offers made by the seller, as this can only result in buyer’s remorse and lifelong debts.¬†¬†

Also Read: How to Check the Build Quality of a New Home

Get a Home Inspection 

When you choose to buy a home, expect that you’ll come across sellers who are very good at marketing their properties in an attempt to get buyers. Some sellers have been in the real estate market for years, making it very easy for them to persuade any homebuyers.¬†¬†

For you to get the best bang for your buck, get a home inspection and avoid merely relying on the statements of the sellers about the condition of the property. This is especially true if you’re planning to buy a residential property that has been in the market for years. A home inspection will help you determine the condition of the property and assess if it needs major repairs or renovations.¬†¬†

Home inspections should be done by third-party contractors. Any repairs and renovations should also be completed by the seller before closing the deal. If the seller won’t agree to fix any structural problems, consider withdrawing your offer and look for better options. You’ll end up spending more money if you’re going to shoulder any repairs for the home.¬†¬†

Don’t Rush¬†

Buying a home will require a lot of your resources‚ÄĒmoney, time, and effort‚ÄĒwhich is why you should take time and make careful decisions. Once you’ve decided that you’re going to buy a house, take things slow, search for options, and weigh the pros and cons of different properties. The more careful you are, the easier it’ll be for you to come up with educated decisions.¬†¬†

Chris Muller

Chris Muller is a professional personal finance writer who has written for some of the largest financial publications in the world. Chris brings a BBA and MBA in Finance, along with a decade of experience in the field, to help break down complex financial topics into easily digestible pieces through his written content in an effort to assist others in better managing their finances. Chris is currently in pursuit of FI/RE, is an aspiring minimalist, loves craft beer, and is a dad two to kids.

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