Getting your first home is a life-changing decision. Therefore, take the time to think about it and determine if purchasing a house is truly what you want. Are you ready to live in this area for the next 30 years? Can you accomplish your career goals if you stay here? Does your family agree with this decision?
Answer some essential questions to make sure you need this financial change, and it will turn your life for the better. Here is a list of items to review before you take the plunge.
Why do you want to buy a house?
Are your reasons for buying the house realistic? Recent data reveals that many millennial homeowners regret shortly after they buy a home. Clever, a real estate listing company, released a report in April 2019 that concluded that51% of millennialshave regrets connected to their decision to invest in a property. What made them regret their decision? Amongst the factors that caused anguish are the too high monthly expenses, the maintenance the house requires, and the real estate market value depreciation.
Bankrate also released a report that shows that 63% of millennial homeowners experience buyer’s remorse. In their case, the uneasiness unearths from the fact that the purchase came with hidden or unexpected costs. Most people have the misconception they purchase a house and immediately move in, but after they make the down payment, they realise the property requires further improvements to meet their lifestyle; therefore they have to spend extra money.
So, before hiring a real estate agent to assist you in the process, determine why you want to buy a house and make sure your reasoning is sound. If you want to move from rent because you expect owning a place to be more affordable than paying monthly rent, you may want to reconsider your decision.
How long do you plan to live here?
Are you ready to spend the rest of your life in the same area? The answer to this simple question may suddenly change your decision. Buying a house doesn’t necessarily imply living there, but having a 30-years mortgage may make it difficult to move to another city.
Buying a house usually implies staying there for at least three or five years before you move to another place. If you’re short on money, you may even have to stay there until you break even on the home mortgage.
If you plan to relocate with work or move to another town or country to study, then it may be a better idea to stay in a rental. Delaying your first home purchase isn’t a bad thing, you can save money for a larger down payment to make it easier to pay for the house when you purchase it.
How much do you afford to buy?
Don’t buy a house if you know you cannot afford it. The entire mortgage payment should be less than 25% of your monthly gross income to stay away from financial issues. If you have no other debts, you can stretch this to 30%, but make sure the financial effort won’t put a strain on your lifestyle. If purchasing the house requires taking two mortgages, combine the expenses to determine if you meet the criterion.
Your total monthly expenses shouldn’t exceed 35% of your gross income because if you reach beyond, you risk the possibility of losing your house. You may want a large house, but you may not afford to buy it now. Your firstmortgage housedoesn’t have to be your dream home; it should meet your present needs. You can later upgrade or sell it, and purchase another. Only because you’ve always dreamt of raising your family in a beach house, it doesn’t mean you should buy it now when you’re unsure the path your life will take.
Is the real estate agent reliable?
If you decide purchasing your first house is the right call, you may need a real estate agent to match you with your dream property. Having a credible professional by your side can make a big difference in the process. Buying a house is an intricate process, especially if this is the first time you do it because you have no idea how the market works. But an experienced real estate agent understands your needs and preferences and searches the local market to find a house that fits your request.
Before hiring a specialist, make sure they’re a good fit for the job. Only because one of your friends is satisfied with their experience working together, it doesn’t mean the real estate agent is also fit for your quest. Interview more real estate agents, ask them a set of questions to understand their work values, and hire only the one that seems to understand your desires.
Did the house pass inspection?
Before you close the deal on the house, make sure it passes all inspections. As a first-time homeowner, the last thing you want is getting surprising costs when you move in.
It’s worth topay an experienced inspector to check the houseand point out the repairs that require your immediate attention. What’s included in the inspection varies from the area where you buy the house, so ask the inspector to provide you with a list of aspects they’ll verify while on the premises.
Even if you want to renovate and upgrade the house before moving in, it’s best to have a good inspection to identify the issues you need to address down the road. The extent of the repairs can even allow you to negotiate the house price.
Depending on your location, you may be able to add the inspection costs to the purchase contract. It’d be wise to have a purchase contract that allows you to cancel the purchase or negotiate a discount if the house doesn’t pass the inspection.
The bottom line: Are you ready for this life change? Moving to your own house comes with many responsibilities, and you must be prepared to avoid getting the home buyer remorse.
