While the housing market can change on a day-to-day basis, some home buying tips always retain their truth.
By following the advice your parents and grandparents likely considered as they purchased their homes decades ago, you can be sure you’re responsibly undertaking the biggest investment of your lifetime. Here are some insights you can use while purchasing a home.
Don’t buy a bigger house than you can afford
First, don’t spend beyond your means. In other words, don’t buy a bigger or more expensive house than you can afford. Many homeowners learned this lesson the hard way during the downturn in the housing and mortgage markets, leaving millions underwater on mortgages they could no longer pay.
While it’s true that lending standards have gotten stricter, homebuyers can self-regulate by purchasing homes no more than two to three times their annual income. Be sure to determine what you can afford to spend on a home at the beginning stages of your property search. And remember, it’s not a bad idea to begin saving for your down payment now.
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Shop around for a mortgage
As a prospective buyer, you have many finance and loan options. Since you will likely need a loan for your big investment, meet with various banks and lenders to assure you’re getting the best rate, terms and conditions.
By shopping around for a mortgage, you may end up with financial savings and optimal conditions. Compare fees associated with applying through multiple lenders and don’t be afraid to mention you are considering competitors as it may earn you better rates. Some may even have special promos or financing options.
Make your mortgage manageable
In today’s credit-happy world, it may seem silly to turn down a large loan offered by your bank. However, by putting down a generous down payment and choosing a lower mortgage loan, you will offer your family a bit of cushion should your financial situation change.
Want to gauge what your potential house payment could be? Calculate your monthly mortgage payment today!
Focus on the best purchase
Perhaps the most common advice parents and grandparents give out is, “Don’t buy the nicest house on the block.” While humility is a wonderful trait for anyone, this advice is also financially sound.
It may be best to buy a fixer-upper or an average-priced home, so you can add value to it over time. If you buy the standout house of the neighborhood, it’s possible the property won’t appreciate as quickly as the mid-range homes surrounding it.
Rather than picking the most trendy or modern home on the street, consider investing in a property with good bones that’s also within your price range.
Don’t worry about keeping up with the Joneses
Last, don’t buy more house than you need! With investment properties on the rise and social media fostering a digital “keeping-up-with-the-Joneses’” mentality, it seems as though everyone is living above their means these days. By choosing a home that you can grow into, but isn’t too big or extravagant, you’ll be investing in a future that allows you more financial flexibility.