Buying a home is a dream for many people. For so many of us, our home is an investment. It is the summation of years of hard work, graft, pain, financial struggle and years toiling away without anything to show for it. The day that you turn the key and go through the door to your new home is a wondrous occasion. The feeling that you have finally got something that is yours and you have something to show for the years of difficulty, of renting, of houses falling through because the seller decided to retract their sale because they actually decided that they liked where they were living! For all the difficulties you can encounter, becoming a homeowner will feel like it is all worth it. Now, to backtrack from the wonderful end-product, the process of buying a home comes with a lot of things that you need to factor in, and these can be big stressors on buying the home of your dreams, so it helps to be aware of them, and these are as follows.
What Is The Best Approach For You RIGHT NOW? Rent Or Buy?
When it comes to owning your home, the feeling of achievement can sometimes give way to money worries. There are many different costs that can arise as the result of purchasing a home, and many buyers are not aware of these hidden costs, from the admin fees that come with the letting agents, the homeowners insurance costs, closing costs, or the stamp duty that can be added depending on where you live, these costs can end up driving a hard bargain for you. If you total up these additional costs, they may add up to the same amount as the down payment on the house itself! And this is before you even start to tally up all of the maintenance fees! There are advice and ways to calculate your home costs in comparison to renting a property. Keeping an eye on interest rates and attempting to establish a pattern is one way to keep your ear to the ground, which you can look at on Lending Tree, and this will give you an idea of how much money you need to put aside.
You may find that it makes a lot more sense to rent your home. If the seller is willing to settle for that scenario, it works in their favor, as they are getting rent payments, and you are living in the home, so when the time comes that you can start to purchase it for real, the task of moving has already been done! It is an option that many people may not go for, but if you do some research on the person selling, and check out their background, for example, if they are selling up to move abroad, and if they are open to the idea, then you are benefitting from it as much as they are. But in the world of rising house prices and the fact that so many people find it difficult to buy a home, it may make a lot more sense for you financially to stay put or to rent a property.
The Debt-To-Income Ratio Problem
This is something that buyers can tend to overlook. Money lenders will look at how much money you earn and how much goes out. People tend to have lots of debt when they are starting to get on the property ladder, and so, trying to reduce as much debt as you can before you start the process should be priority number one. It is very easy to think that, as mortgage repayments on a property are a lot less than the rent for that same type of home, then you will have no problem repaying a mortgage. That isn’t the way the banks look at it and based on what your expenses are on a day to day basis can mean the difference between getting approved or getting completely flat-out, turned down.
The best method is to get a copy of your bank statement and go through it with a fine-tooth comb. This is what the lenders will, in essence, do. You could start to see patterns forming, such as that morning cup of java you get from the coffeehouse on the way to work, and that costs $3.95, doing that five days a week means that it costs you $19.75 a week, $79.00 a month, and so, potentially, you could be spending roughly $948.00 a year on one coffee! So, ask yourself, can you do without certain “luxuries” in the short-term for the purposes of buying a home? In going through your bank statement and if you see patterns forming that you can identify as unnecessary, like that one coffee, then stop getting into those patterns. While we all have to live in the real world, taking a holistic approach to your outgoings will make you start to prioritize your spendings and identify completely pointless habits. Does your mobile phone contract need to be as comprehensive as you have it currently, or can it be scaled back so you can save yourself some money in the process? Asking yourself if you really need these things is something you need to do. A money lender will look at you to see if you are reliable, and this is one approach they will take.
The other thing they will look at is the credit score. This is the definining factor in what makes you reliable financially, so if you have a decent credit history this will serve you in good stead. But it is worth mentioning, if you someone that has never owned a credit card, and there are a few in the world, get one! While this sounds counterintuitive, you need to have credit to improve your credit rating. So by getting a credit card and not using it, or paying it off as soon as the bill comes, this shows you to be reliable with money. The logic that by not having a credit card means that your credit score is good is, unfortunately incorrect in this instance.
The Online Lender Dilemma
With the amount of online lenders offering the moon on a stick, it can be very easy to get swept away by these sorts of companies without reading the small print. And the fact about working with online lenders is that contact and communication are not their strong point. The difference in comparison to working with a lender in person is that if you needed advice, the online lender might not be at the end of the phone when you need them. If you are struggling with the small print, again, with the vast amounts of complex wording and definitions you may need to look up, it brings so much peace of mind to have someone that you can speak to, in person and over the phone. Having the lending process spelled out in ways that you can understand is a right you are entitled to, so be sure to exercise that right. If you decide to go for an online lender, know what you are getting yourself in for, because if you are too far into the process to back out, you could end up paying rates that were more than you originally bargained for.
The Home Itself
The final piece of the puzzle is the home itself. It is so tempting to jump on board when you have found the right home, but if you don’t inspect the property and hastily sign your name on the dotted line, you may find yourself in a Money Pit-style situation. Looking through the home, inside and out, and by utilizing the skills of someone who has been in this situation before, or someone with a trained eye for these things will help you to spot problems that are not obvious to you or ones that may arise in the future. As well as looking out for the common problems, such as water damaged, cracks, or even strange smells in the key areas, look in the attics or basements to get a properly educated look at the property. As well as the home itself, the area that the home is in could lead to potential issues further down the line, sewage or subsidence can cause major inconveniences or even be potentially hazardous. And as well as land issues, the crime rate, and community is key factors to the profitability of a house should you wish to sell it on.
Purchasing a home is a wonderful step towards getting onto the property ladder, and towards setting up a place to raise a family and enjoy your life, so making sure you know what pitfalls may trip you up along the way will make the home buying process a much smoother one. Buying a home, they say, is one of the more stressful things you can do, so by being aware of what may come your way will leave you ready, willing and able to buy your dream home