As much as outside factors can pressure you into thinking now is a good time to buy a home, make sure you think about what buying a home would do to your life situation. Here are six questions to ask yourself before buying a home.
Before Buying a Home, Answer these 6 Questions
1. Are you ready?
Buying a home can be very stressful, time consuming, and a lot of work, so before buying a home ask yourself: Are you ready? Are other large life events happening at the time you are considering buying a home? If you do chose to move, how will this affect your friends and family? Are your finances in order for you to get pre-approved for a mortgage?
These are all very important questions to ask before completing a pre-approval application through a mortgage lender. The last thing you want is to have paid earnest money on a home, paid for movers to help transfer your furniture, and sold a lot of your home décor just to find out that you aren’t actually ready to move. Consider making a pros and cons list to help you start to answer your questions and decide if moving is right for you and your family at this time.
2. Have you considered costs that come after moving in?
The expenses don’t stop when your real estate agent hands over your keys. Keep in mind before buying a home that you may need to purchase several appliances for the home, such as a washer, dryer, refrigerator, dishwasher, microwave, air conditioner, etc. So when making your new home budget, be prepared to buy large home items like appliances.
You also have to consider furniture/décor. When you move into a new home, you’ll be tempted to fill up the space. Wall décor, outside furniture, and kitchen décor are only a few places you’ll want to decorate. And finally, you’ll need to think about the cost of monthly utilities. Water, electricity, internet, water, and garbage are among the expenses you’ll see when moving into a new home.
3. How long do you plan on staying in the area?
The longer you plan to stay the more likely it is that you’ll build equity. Some experts say you should plan to live in a home for at least 5 years. This gives the home time to build enough equity to recoup the transaction costs as well prepare you for the down payment of the next home you’re planning to buy. So before buying a home, think about what factors could change in the next few years. If your job might require that you relocate soon, your household makeup is likely to change or some other circumstance could make the home you would choose now incompatible with your future needs, it might be smart to delay.
4. Have you checked out your finances and credit?
You don’t need to have a 720 credit score to qualify for a mortgage. A few different loan programs including FHA and VA often accept much loser scores. So make sure you know what constitutes your credit score, how you currently stand, and if you need to create a credit improvement plan to qualify for your preferred home loan.
It’s a good idea to examine your credit score now, see what’s making the biggest impact in your score (both positively and negatively) and create a plan to increase your score before applying for a home loan. Our team would be happy to talk to you at no cost or obligation about your current situation and discuss mortgage lending programs that might be ideal for you.
5. What’s your plan for living if you have to sell your home?
If you are considering buying your home and it’s a pre-sale, what’s your living situation going to be if you have to move out of your current home and your new home is not completed yet? For many reasons, closing dates are often altered. Depending on weather, shortages, and other factors, it’s possible that you may not be moving in on the date you were quoted when first agreeing to buy your new home. Apartments, family and friends are good resources to reach out to if you find yourself in that pickle. So make sure to consider a backup plan if your closing date does not work out.
6. Is the home a good decision?
Buying a home can be made on emotions. So make sure you’ve weighed the factors of moving before buying a home: location, commute, quality of home, neighborhood, walkability, schools, size of home and night life. Take your most important factors and evaluate the home based on what’s important to you. This way, you don’t end up spending more than you planned on for yesterday’s “dream home” that you are having second thoughts about now. If neighborhood is most important to you, think about what shops, restaurants, grocery stores, and parks are near the home in consideration. If downsizing is important to you, then make sure the floor plan makes sense and will accommodate your family comfortably. Whatever is your non-negotiable, make sure you’ve thought long and hard about its presence at your new home.