Buying a home is certainly a dream of every millennial looking to settle down and start a family. But what most people don’t know about buying a home is that it involves a lot of preparation in addition to a strong mental and monetary effort. The real estate trends make it more expensive to own a home and will in most cases surpass your budgets due to hidden expenses and housekeeping demands. Therefore, you shouldn’t rush to buy a house instead, review your budget, check your credit report score and plan accordingly before deciding to buy a home that best suits you or your family. Below are facts you should be well aware before buying a home.
Choose an Ideal Mortgage Rate
Sometimes when buying a home, your savings may not be enough to get you your dream home, therefore, you will need mortgage financing. When choosing an ideal mortgage plan, it is critical to proceed with caution and choose a mortgage plan you can comfortably afford. You don’t have to take a big mortgage even when you are qualified for it since finances may look good on paper but may cause you financial misery when repaying. Only buy a house you can comfortably afford and what the mortgage company thinks you can afford. You should limit your mortgage payment to 30% of your gross monthly income.
Be Prepared to Incur Additional Expenses on top of your Budget
Buying a home in an expensive venture and you should well be prepared to incur additional expenses. For instance, you will require new furnishings for your new house. Your house space and style will determine the number of furniture you will require and, in most cases, you will need new furniture to match your house interior design. Furnishing a home is expensive and takes approximately 25% of the home’s total value. Therefore, before buying a home, you should be prepared to cater for additional expenses.
Before buying a home, consider the school districts
Regardless of whether you have childless or not, it is vital to buy a home located in a good school district. It is the responsibility of every parent to ensure that their children receive a quality education in good schools. And if you are not looking forward to having children, homes found in good school districts worth a little more and sell faster, therefore, you won’t have to struggle when moving to your next home.
You don’t need a 20% down payment when buying a home
While most real estate developers would give a provision of the 20% down payment when buying a new home, it’s a common misconception, and you should avoid it. The 20% rule usually comes with additional expenses in the form of premiums for the extra risk lenders in the form Private Mortgage Insurance, and it’s usually 1 to 2% to the totals home’s value. It’s much better and less costly to pay for a home in one installment rather than the 20% down payment.
Before buying a home, look at the future development plans for the neighbourhood
It may be essential to consider future development plans within the home’s neighbourhood before deciding to buy the home. For instance, go to the local planning office and know what coming up in the surrounding areas be its shopping malls, restaurants, kids’ playgrounds, parks, schools and much more. When you are aware of future developments, you will plan our living accordingly.
Be Prepared to Handle Repairs
After buying a home, you will be your landlord, and you should be ready to handle annual repairs and renovations. You may handle the repairs yourself or hire a contractor but, either way, you will still incur some cost running up to 4% of the home’s total value. Nonetheless, repairs from natural disasters or robbery can be catered for by your homeowner’s insurance policy and in turn, will save you a great deal of money. You should handle repairs from general wear and tear. To cut down on expenses arising from general maintenance and repairs, you may consider taking a long-term home warranty plan.
To conclude, there is a big difference between “wanting” to buy a home and “being ready” to buy a home. There are a lot of vital facts you should be aware and prepared before purchasing a home. For instance, you should be mindful of your credit report, review your budget and shop around for the best mortgage. You should also be ready to cater to additional expenses from furnishings and general repairs. Nevertheless, owning a home is a dream of many and a big stride in life.