Buying Tips


January 11, 2022

Before you commit to purchasing a home, you should examine your motives for doing so. Most people buy homes to live in, others buy them to rent out or perhaps plan on starting a family, whatever your reason is, here are some tips to guide you through the process.

Know-How Much You Can Afford

Determine how much you can afford based on your income, expenses, savings, debts, and assets. If you need help figuring out how big a monthly payment you can afford, speak with a financial advisor rather than your banker. Bankers have incentives to make larger loans, and the math they use to determine what you can afford can lead middle- and working-class families to believe they can afford more than they comfortably can.

Mortgages – Beware of Hidden Costs

Your monthly payments will not only include loan costs but also costs like property taxes and homeowner's insurance. You may be required to buy private mortgage insurance depending on the size of your down payment. The home buying process also incurs many costs. Closing costs may be 2% to 5% of the home's purchase price and cover things like attorney fees and title fees.

Consider Mobility

If your current career path or relationship could take you to another city, state, or country in the next five years, you should think extra carefully about purchasing a home. You could be stuck having to sell a house in a slow market, or you could end up turning down career opportunities because you feel anchored to the place you purchased a home. Once you consider closing costs and the costs of selling again, you tend to come out better financially by renting if you think you might be moving within five years.

Choose Your Real Estate Agent Wisely

You must choose a real estate agent with whom you can communicate easily and who will work on your behalf once you find a house you want to buy. Learn about their commission structures and how familiar they are with the area in which you want to find a home. Ask questions like how long they have been in real estate and try to get a feel for how easy they are to reach and talk to. You will be spending plenty of time with your real estate agent, so take the time to choose carefully.

Understanding Closing and What Happens Afterward

At closing, your realtor, lender, and attorney will meet and tackle a big stack of paperwork. You will be walked through every page so that you understand what you are signing. During the closing, you will go through all the paperwork until everything has been initialed and signed. When it is over, you will be given your copies of the paperwork and the keys to your home. After that, you can enjoy the tax benefits and generally favorable investment characteristics of homeownership!


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