Whether you’re a first-time homebuyer or a seasoned real
estate investor, buying a home is a an exciting process. However, there’s also
a lot to consider when you decide to buy. So before you begin your search for
the perfect property, here are four questions you should ask yourself.
What do I want?
Take the time to figure out what type of property you want
to buy. From single-family and multi-family homes to condos and co-ops, there
are many different options on the market and it’s important to choose the type
that best fits your needs. Figuring out the town or neighborhood you want to
live in is equally important. While a property might have all of the amenities
you’re looking for, factors like crime rate and proximity to highways can
impact the overall home-owning experience. A good idea is to list out and
prioritize your needs (e.g. large backyard, great school system) before you
begin your search.
What can I afford?
The rule of thumb is that you should never spend more than
30% of your monthly income on a mortgage payment. An alternate rule states that
you can afford to buy a property that runs about two-and-a-half times your
annual salary. For a more tailored look at what you can afford, use an online
mortgage calculator to see what your monthly mortgage payments would be if you
bought a home today.
Am I financially prepared?
A few months before you start searching for a home, review
your credit history and make sure it is in good standing. Get copies of your
credit report, ensure that it’s accurate, and fix any issues you discover. It’s
likely that you’ll also want to get pre-approved for a home loan, which will
put you in a better position to make a serious offer once you find the right
property. Pre-approval from a lender is based on your credit history, debt, and
income.
How do I make the best bid possible?
Do your research! Your opening bid should be based on the
sales trends of similar homes in the area. So before making your opening bid,
get online and review the selling prices of comparable properties. If these
properties sold for less than the current asking price of the home you’re
looking at, you can feel comfortable make a bid that’s slightly lower than what
the seller is asking.
