For the last five years, the median age for first-time home buyers has remained consistent at 31 years of age. A home mortgage is a large investment, both figuratively and literally. It is imperative to do your homework prior to the big purchase.
So, what do you need to know? What are some helpful things to consider and mistakes to avoid? We’re glad you asked.
Six Things to Know for Those Ready to Become Home Buyers
Study the Neighborhood
If you buy a house in a neighborhood of renters, you take the chance that a few bad renters or a bad landlord can make the neighborhood unappealing. What if the neighborhood is full of graduate students and single people? Will your children find playmates? Walk around the neighborhood at night, do you feel safe?
Loving your home is important, but all homes belong to a neighborhood, which you should appreciate as well.
Three Strikes, You’re Out
Three strikes and you’re out. Everyone knows this. It can also be a useful rule-of-thumb for home buyers. If a house property has three flaws, which are not easy to correct, move on. For example, if the house is on a busy street, has a tiny garage and only one bathroom, you may want to avoid it.
Practice Your Love Letter Writing
You have found a home you want…badly. Get your creative juices going and write to the sellers. Tell them how their house is the perfect fit for you. They’ll likely feel bittersweet about selling the home, and your appreciation for the house will likely make an impression on them. If multiple offers for the house come in, they may pick you just on the emotional appeal of the letter you wrote.
Don’t Hastily Count Your Gold
When buying a new home, how much of a mortgage can you afford? You want to buy a house you can afford. Base the amount on your current income. Do not project into the future, or leverage what you may earn in the near future. Mortgages must be based on current, stable income sources.
Do not anticipate your potential earnings, even if you are in the last year of nursing school or law school, or you know a work promotion is impending. You cannot predict the future. There are no guarantees down the road.
Make a List of Things You Will Not Negotiate
What are your values? What would enhance or deter your well-being? Make a list of these very things and let them guide your decision making. They will often define your desired location, choice of amenities, and more.
Continue to revisit this list and make amendments once you have started to shop around in earnest.
Scrub Your Credit Clean
Credit history and credit score are huge factors that go a long way towards determining your risk as a borrower. Before you apply for a mortgage, check your credit score and dispute any potential errors.
Pay down high balance credit cards—get your balances to less than thirty percent of every card’s credit limit.
And hold off on large credit purchases such as a car loan, since large purchases affect your debt-to-income ratio.
Current mortgage rates are low. Demand for homes is high. In other words, it is a seller’s market.
This means you need to enter the market with a great deal of knowledge. Follow the preceding tips to set you on your wisdom-gathering journey.
Best of luck with your hunt.