Top 5 Home Buying Tips
Budget Budget Budget!
One of, if not the most important things to do when deciding to purchase a home is the budget. Location is the most common reason home buyers are going over budget. According to real estate data, urban buyers are more likely to go over budget than suburban or rural buyers. In today’s market, it’s incredibly easy to go over budget — almost a third of buyers who purchased last year did. Always remember to be realistic about your local market and about your plan. It is helpful to make a hierarchical list which goes from most to least important on things that you want like location, schools, square footage and know what you’re willing to compromise on.
2. Long Term Investment
A home is a significant investment, not to mention a vital piece of stability. According to real estate data, the majority of Americans who sold their homes last year had lived in their home for at least a decade before selling.
Some are even staying for the long haul. Almost half of all homeowners are living in the first home they ever purchased. In short: Buy a home you want to live in for at least five years — one equipped (or ready to be equipped) with the features and space you need, both now and in the future.
3. Try To Put 20% Down
If possible, attempt to put a 20% down payment for three reasons:
Buyers who don’t put a full 20% down pay a premium, most commonly in the form of private mortgage insurance. This is less financially punishing than it used to be, given today’s low mortgage rates. A monthly mortgage payment (with PMI) may be lower than a monthly rental payment in many markets.
Buyers who put more down upfront typically make fewer offers and buy faster than those who put less down. Research found that buyers with higher down payments make 1.9 offers on average, compared to 2.4 offers for buyers with lower down payments (after controlling for market conditions).
A higher down payment reduces your financial risk. You don’t want to owe more money than your house is worth if local markets dip when you need to sell.
4. Don’t Be Afraid To Walk Away!
Buying a home is a time-consuming, stressful but ultimately rewarding endeavor — if you end up closing on a home that meets your needs. But it’s important to manage your expectations in case you don’t immediately find a home you can afford with the features you need.
Always be prepared to walk away if the sellers don’t accept your offer, the home doesn’t pass a rigorous inspection or the timing isn’t right. Hold fast to your list of must-haves, stick to what you can afford and don’t overreach or settle.
It’s no tragedy to miss out on any particular house. Remember that you’re playing the long game. You want to be happy 10 years from now.
5. Buy to improve your life, not speculate with money
Your home is more than a financial investment; it’s where you sleep, eat, host friends, raise your children — it’s where your life happens.
The housing market is too unpredictable to buy a (primary) home purely because you think it will net a big short-term financial return. You will most likely be living in this home for several years, regardless of how it appreciates, so your first priority should be finding a home that will meet your needs and help you build the life you want.
Contact us to find your prefect home. 626.593.4225