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10 Things That Every Homebuyer Should Know

02/01/2016

Because buying a home is a major financial investment, you want to know everything possible before signing on the dotted line.

Ten Important Considerations

  1. Trusted Real Estate Professional—Not all realtors are created equal. Instead of working for a listing agent who actually represents the seller, you need a real estate professional on your side. You want someone who will help locate potential homes, negotiate price and terms, navigate the home inspection, and make closing as painless as possible.

  2. The Dreaded Contract—Contracts are not set in stone. In fact, they are meant to be negotiated. Rather than signing a standard agreement, you have the right to ask for certain things, like more time regarding the home inspection or for certain appliances to be included in the purchase price.

  3. Long-Term Plans—People often purchase a home for current needs, only to outgrow it within a few years. When buying a home, try to think more long term. Life changes, so you want a home that accommodates your future as well as present needs.

  4. Financial Commitment—If you will rely on income from a spouse, significant other, or roommate, make sure you are prepared for unexpected changes. Because buying a home is a big financial commitment, be sure that you can afford the mortgage on your own or have an exit strategy if something changes.

  5. See the Potential—When house shopping, look beyond paint and dirt. With a little vision, an ordinary house can be transformed into a beautiful home.

  6. Stay Within Budget—Just because you get preapproved for a mortgage loan of $300,000 does not mean that you should spend that much. Be realistic about what you can afford, based on income and lifestyle.

  7. Beyond Purchase Price—The purchase price of a home is not the only expense. Therefore, consider all the associated costs, including insurance, real estate taxes, maintenance, repairs, homeowner association dues, and so on.

  8. Student Loan Debt—Following the housing market crash, student loan debt is treated like actual debt. In 2015, big revisions to the FHA guidelines negatively impacted many first-time homebuyers who carried student loan debt. If you have a student loan in deferment and want to buy a home, consider enrolling in a documented income-based repayment plan. With this, the lender has necessary documents as part of assessing ongoing liability.

  9. Interest Rate Deduction—Never think the mortgage interest deduction will make up for a higher-priced home. Prior to home shopping, talk to a licensed accountant or CPA.

  10. Renting Is an Option—Although you might have your heart set on buying a home, renting may be the better option. Along with benefits, there are many unpredictable factors of owning a home, like interest rate, the housing market, future plans, repairs and maintenance, and so on. The bottom line—make absolutely sure that owning is right for you.

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